Exhibit 1.1

 

Execution Version

 

 

ASHFORD HOSPITALITY PRIME, INC.

 

(a Maryland corporation)

 

1,975,000 Shares of 5.50% Series B Cumulative Convertible Preferred Stock

 

UNDERWRITING AGREEMENT

 

Dated:  March 2, 2017

 

 

 

Ashford Hospitality Prime, Inc.

 

(a Maryland corporation)

 

1,975,000 Shares of 5.50% Series B Cumulative Convertible Preferred Stock

 

(Par Value $0.01 Per Share)

 

UNDERWRITING AGREEMENT

 

March 2, 2017

 

UBS Securities LLC

Morgan Stanley & Co. LLC

 

c/o UBS Securities LLC

1285 Avenue of the Americas

New York, New York 10019

 

c/o Morgan Stanley & Co. LLC

1585 Broadway

New York, New York 10036

 

as Representatives of the several Underwriters

named in Schedule A hereto

 

Ladies and Gentlemen:

 

Ashford Hospitality Prime, Inc., a Maryland corporation (the “ Company ”), Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership and the Company’s operating partnership (the “ Operating Partnership ”), and Ashford Hospitality Advisors LLC, a Delaware limited liability company (the “ Advisor ”), confirm their respective agreements with UBS Securities LLC (“ UBS ”) and Morgan Stanley & Co. LLC (“ Morgan Stanley ”) and each of the Underwriters named in Schedule A hereto (collectively, the “ Underwriters ,” which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom UBS and Morgan Stanley are acting as representatives (in such capacity, the “ Representatives ”), with respect to (i) the sale by the Company and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of shares of 5.50% Series B Cumulative Convertible Preferred Stock (liquidation preference $25.00 per share), par value $0.01 per share, of the Company (“ Series B Preferred Stock ”) set forth in Schedule A hereto and (ii) the grant by the Company to the Underwriters, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of 296,250 additional shares of Series B Preferred Stock.  The aforesaid 1,975,000 shares of Series B Preferred Stock (the “ Initial Securities ”) to be purchased by the Underwriters and all or any part of the 296,250  shares of Series B Preferred Stock subject to the option described in Section 2(b) hereof (the “ Option Securities ”) are herein called, collectively, the “ Securities .”

 

The Company and the Operating Partnership understand that the Underwriters propose to make a public offering of the Securities as soon as the Representatives deem advisable after this Agreement has been executed and delivered.

 

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The Company has filed with the Securities and Exchange Commission (the “ Commission ”), a registration statement on Form S-3 (File No. 333-200718), including the related base prospectus, covering the offer and sale of certain securities of the Company, including the Securities, under the Securities Act of 1933, as amended (the “ 1933 Act ”). The registration statement, including the amendment thereto, is effective under the 1933 Act, and the rules and regulations promulgated thereunder (the “ 1933 Act Regulations ”). Promptly after execution and delivery of this Agreement, the Company will prepare and file an Issuer Free Writing Prospectus (as defined below), and a prospectus in accordance with the provisions of Rule 430B of the 1933 Act Regulations (“ Rule 430B ”) and paragraph (b) of Rule 424 (“ Rule 424(b) ”) of the 1933 Act Regulations. Any information included in a prospectus or prospectus supplement deemed or retroactively deemed to be part of such registration statement that was omitted from such registration statement at the time it became effective but that is deemed to be part of and included in such registration statement pursuant to Rule 430B of the 1933 Act Regulations is referred to as “Rule 430B Information.” Each preliminary prospectus, including the base prospectus and preliminary prospectus supplement, used in connection with the offering of the Securities that omitted Rule 430B Information, including any documents incorporated or deemed to be incorporated by reference therein, are collectively referred to herein as a “preliminary prospectus.” Such registration statement, as of any time, means such registration statement as amended by any post-effective amendments thereto at such time, including the exhibits and any schedules thereto at such time, the documents incorporated or deemed to be incorporated by reference therein at such time pursuant to Item 12 of Form S-3 under the 1933 Act and the information otherwise deemed to be a part thereof as of such time pursuant to Rule 430B, is referred to herein as the “Registration Statement;” provided , however , that the “Registration Statement” without reference to a time means such registration statement as amended by any post-effective amendments thereto as of the time of the first contract of sale for the Securities, which time shall be considered the “new effective date” of such registration statement with respect to the Securities within the meaning of paragraph (f)(2) of Rule 430B, including the exhibits and schedules thereto as of such time, the documents incorporated or deemed incorporated by reference therein at such time pursuant to Item 12 of Form S-3 under the 1933 Act and the information otherwise deemed to be a part thereof as of such time pursuant to the Rule 430B.  If the Company files another registration statement with the Commission to register a portion of the Securities pursuant to Rule 462(b) under the 1933 Act (the “ Rule 462 Registration Statement ”), then any reference to “Registration Statement” herein shall be deemed to include the Rule 462 Registration Statement.  The final prospectus, including the base prospectus and final prospectus supplement, in the form first furnished or made available to the Underwriters for use in connection with the offering of the Securities, including the documents incorporated or deemed to be incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, are collectively referred to herein as the “Prospectus.” For purposes of this Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system or any successor system (“ EDGAR ”).

 

As used in this Agreement:

 

“ Applicable Time ” means 5:45 p.m., New York time, on March 2, 2017 or such other time as agreed by the Company and the Representatives.

 

“ General Disclosure Package ” means any Issuer General Use Free Writing Prospectuses issued at or prior to the Applicable Time, the most recent preliminary prospectus relating to the Securities (including any documents incorporated therein by reference) that is distributed to investors prior to the Applicable Time and the information included on Schedule B hereto, all considered together.

 

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“ Issuer Free Writing Prospectus ” means any “issuer free writing prospectus,” as defined in Rule 433 of the 1933 Act Regulations (“ Rule 433 ”), including without limitation any “free writing prospectus” (as defined in Rule 405 of the 1933 Act Regulations (“ Rule 405 ”)) relating to the Securities that is (i) required to be filed with the Commission by the Company, (ii) a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission, or (iii) exempt from filing with the Commission pursuant to Rule 433(d)(5)(i) because it contains a description of the Securities or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).

 

“ Issuer General Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors (other than a “ bona fide electronic road show,” as defined in Rule 433), as evidenced by its being specified in Schedule C hereto.

 

“ Issuer Limited Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.

 

“ Testing-the-Waters Communication ” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the 1933 Act.

 

“ Written Testing-the-Waters Communication ” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the 1933 Act.

 

All references in this Agreement to financial statements and schedules and other information which is “contained,” “included” or “stated” (or other references of like import) in the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to include all such financial statements and schedules and other information incorporated or deemed incorporated by reference in the Registration Statement, any preliminary prospectus or the Prospectus, as the case may be, prior to the execution and delivery of this Agreement; and all references in this Agreement to amendments or supplements to the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to include the filing of any document under the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”), and the rules and regulations promulgated thereunder (the “ 1934 Act Regulations ”), incorporated or deemed to be incorporated by reference in the Registration Statement, such preliminary prospectus or the Prospectus, as the case may be, at or after the execution and delivery of this Agreement.

 

SECTION 1.                             Representations and Warranties .

 

(a)                                  Representations and Warranties by the Company and the Operating Partnership .  Each of the Company and the Operating Partnership, jointly and severally, represents and warrants to each Underwriter as of the date hereof, the Applicable Time, the Closing Time (as defined below) and any Date of Delivery (as defined below), and agrees with each Underwriter, as follows:

 

(i)                                      Registration Statement and Prospectuses .  The Company meets the requirements for use of Form S-3 under the 1933 Act and the Securities have been and remain eligible for registration by the Company on such shelf registration statement. Each of the Registration Statement and any post-effective amendment thereto has become effective under the 1933 Act.  No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the 1933 Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any

 

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of those purposes have been instituted or are pending or, to the knowledge of the Company, contemplated.  The Company has complied with each request (if any) from the Commission for additional information.

 

Each of the Registration Statement and any post-effective amendment thereto, at the time of its effectiveness and at each deemed effective date with respect to the Underwriters pursuant to Rule 430B(f)(2) under the 1933 Act Regulations, complied in all material respects at the time it became effective with the requirements of the 1933 Act and the 1933 Act Regulations.  Each preliminary prospectus (including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment or supplement thereto), any supplement thereto or any prospectus wrapper prepared in connection therewith, and the Prospectus complied in all material respects at the time it was filed with the 1933 Act and the 1933 Act Regulations.  Each preliminary prospectus delivered to the Underwriters for use in connection with this offering was identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, when they became effective or at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the 1934 Act Regulations.

 

(ii)                                   Testing-the-Waters Materials .  The Company (A) has not engaged in any Testing-the-Waters Communication and (B) has not authorized anyone to engage in Testing-the-Waters Communications.  The Company has not distributed any Written Testing-the-Waters Communications.

 

(iii)                                No Material Adverse Change .  Except as otherwise stated therein, since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package or the Prospectus, (A) there has not been any change, or any development or event that reasonably could be expected to result in a change, that has or reasonably could be expected to have a material adverse effect on the assets, business, operations, earnings, properties, condition (financial or otherwise) or prospects of the Company, the Operating Partnership and their respective subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a “ Material Adverse Effect ”), (B) there has not been any transaction that is material to the Company, the Operating Partnership and their respective subsidiaries considered as one enterprise entered into or agreed to be entered into by the Company, the Operating Partnership or any of their subsidiaries, (C) there has not been any obligation, contingent or otherwise, directly or indirectly incurred by the Company, the Operating Partnership or any subsidiary that is material to the Company, the Operating Partnership and their subsidiaries considered as one enterprise, and (D) except for regular quarterly dividends on the Company’s common stock, par value $0.01 per share (the “ Common Stock ”), the Series B Preferred Stock and regular quarterly distributions on the limited partner interests in the Operating Partnership (“ OP Units ”), there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock or by the Operating Partnership on any of its partnership interests.

 

(iv)                               Good Standing of the Company .  The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Maryland and has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement and, as the sole

 

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managing member of the sole general partner of the Operating Partnership, to cause the Operating Partnership to enter into and perform the Operating Partnership’s obligations under this Agreement; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect.

 

(v)                                  Good Standing of the Operating Partnership; Partnership Agreement .  The Operating Partnership has been duly formed and is validly existing as a limited partnership in good standing under the laws of the State of Delaware and has partnership power and authority to own or lease, as the case may be, and to operate its properties and to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement; and the Operating Partnership is duly qualified as a foreign partnership to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect.  The Company is the sole managing member of the sole general partner of the Operating Partnership.  The aggregate percentage interests of the Company and the limited partners in the Operating Partnership are as set forth in the Registration Statement, the General Disclosure Package and the Prospectus.  The Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership has been duly and validly authorized, executed and delivered by or on behalf of the partners of the Operating Partnership and constitutes a valid and binding agreement of the parties thereto, enforceable in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or affecting creditors’ rights and general principles of equity and except as rights to indemnity and contribution thereunder may be limited by applicable law or policies underlying such law.

 

(vi)                               Good Standing of Subsidiaries .  Each subsidiary of the Company has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its incorporation or organization, has corporate or similar power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify could not reasonably be expected to result in a Material Adverse Effect.  All of the issued and outstanding capital stock or other ownership interests of each subsidiary has been duly authorized and validly issued, is (as applicable) fully paid and non-assessable (except to the extent such non-assessability may be affected by Section 17-607 of the Delaware Revised Uniform Limited Partnership Act or Section 18-607 of the Delaware Limited Liability Company Act) and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity, other than (i) as described in the Registration Statement, the General Disclosure Package and the Prospectus and (ii) any security interest, mortgage, pledge, lien, encumbrance, claim or equity in connection with indebtedness described in the Registration Statement, the General Disclosure Package and the Prospectus.  None of the outstanding shares of capital stock or other ownership interests of any subsidiary was issued in violation of the preemptive or similar rights of any securityholder of such subsidiary.  The Company does not own or control, directly or indirectly, any corporation, association or other entity that is or will be a “significant subsidiary” (within the meaning of Rule 1-02(w) of Regulation S-X) other than the entities listed on Schedule D hereto.  For the purposes of this

 

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Agreement, “subsidiary” means each direct and indirect subsidiary of the Company, including, without limitation, the Operating Partnership and its subsidiaries.

 

(vii)                            Restrictions on Distributions .  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, no subsidiary of the Company is prohibited or restricted, directly or indirectly, from paying any distributions to the Company or the Operating Partnership, or from making any other distribution on such subsidiary’s equity interests, or from repaying to the Company or any other subsidiary any amounts that may from time to time become due under any loans or advances to such subsidiary from the Company or such other subsidiary, or from transferring any of such subsidiary’s property or assets to the Company or any other subsidiary of the Company.

 

(viii)                         Capitalization .  The authorized, issued and outstanding shares of capital stock of the Company are as set forth in the Registration Statement, the General Disclosure Package and the Prospectus (except for subsequent issuances, if any, pursuant to this Agreement, pursuant to reservations, agreements or employee benefit plans referred to in the Registration Statement, the General Disclosure Package and the Prospectus or pursuant to the exercise, redemption, or exchange of convertible or exchangeable securities, options or warrants referred to in the Registration Statement, the General Disclosure Package and the Prospectus, including OP Units).  The issued and outstanding shares of capital stock of the Company, have been duly authorized and validly issued and are fully paid and non-assessable.  None of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any securityholder of the Company.  The issued and outstanding OP Units have been duly authorized for issuance by the Operating Partnership to the holders thereof and are validly issued and fully paid.  The issuance of such OP Units was exempt from registration or qualification under the 1933 Act and applicable state securities laws.  None of such OP Units were issued in violation of the preemptive or other similar rights of any securityholder of the Operating Partnership or any other person or entity.  The 5.50% Series B Cumulative Convertible Preferred Units (“ Series B Preferred Units ”) to be issued by the Operating Partnership to the Company in connection with the contribution of the net proceeds from the sale of the Securities to the Operating Partnership will be, on or prior to the Closing Time, duly authorized for issuance by the Operating Partnership to the holders thereof and at the Closing Time, will be validly issued and fully paid.  The issuance of such Series B Preferred Units will be exempt from registration or qualification under the 1933 Act and applicable state securities laws.  None of such Series B Preferred Units to be issued will be in violation of the preemptive or other similar rights of any securityholder of the Operating Partnership or any other person or entity.  Except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, there are no outstanding options, warrants or other rights to purchase, agreements or other obligations to issue, or rights to convert any obligations into or exchange any securities or interests for shares of the Company’s or its subsidiaries’ capital stock, including OP Units or other ownership interests of the Operating Partnership.

 

(ix)                               Compliance with Laws .  The Company and the subsidiaries are in compliance with all applicable federal, state, local or foreign laws, regulations, rules, decrees, judgments and orders, including those relating to transactions with affiliates, except where any failures to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(x)                                  No Defaults . Neither the Company nor any subsidiary is in breach of or in default under (nor has any event occurred which with notice, lapse of time, or both would constitute a breach of, or default under) (A) its respective organizational documents, or (B) in the

 

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performance or observance of any obligation, agreement, covenant or condition contained in any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Company or any subsidiary is a party or by which any of them or their respective properties is bound, except in the case of clause (B), for such breaches or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

(xi)                               No Conflicts . The execution, delivery and performance of this Agreement and consummation of the transactions contemplated herein (including the Company’s issuance and sale of the Securities and its use of the proceeds from the sale of the Securities as described therein under the caption “Use of Proceeds” and any issuance of the Conversion Shares upon conversion of the Securities)  will not (i) conflict with, or result in any breach of, or constitute a default under (nor constitute any event which with notice, lapse of time, or both would constitute a breach of, or default under), (A) any provision of the organizational documents of the Company (including the Articles Supplementary (as defined below)) or any subsidiary, or (B) any provision of any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Company or any subsidiary is a party or by which any of them or their respective assets or properties may be bound or affected, or under any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to the Company or any subsidiary, except in the case of this clause (B) for such breaches or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; or (ii) result in the creation or imposition of any lien, charge, claim or encumbrance upon any property or asset of the Company or any subsidiary.

 

(xii)                            Due Authorization of Agreements .  This Agreement has been duly authorized, executed and delivered by the Company and the Operating Partnership and is a legal, valid and binding agreement of the Company and the Operating Partnership.  The Articles Supplementary to the Company’s charter establishing additional shares of Series B Preferred Stock and setting forth the terms of the Securities (the “ Articles Supplementary ”) will be, prior to the Closing Time, duly authorized, executed and filed by the Company with the State Department of Assessments and Taxation of the State of Maryland (the “ SDAT ”).  The amendment to the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership establishing additional Series B Preferred Units and setting forth the terms of the Series B Preferred Units (the “ Operating Partnership Agreement Amendment ”) will be, prior to the Closing Time, duly authorized, executed and delivered.  The Operating Partnership Agreement Amendment will, prior to the Closing Time, constitute a legally valid and binding agreement of the Operating Partnership enforceable against the Operating Partnership in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or affecting creditors’ rights and general principles of equity and except as rights to indemnity and contribution thereunder may be limited by applicable law or policies underlying such law.

 

(xiii)                         Authorization of Advisory Agreement . The Third Amended and Restated Advisory Agreement, dated June 10, 2015, by and among the Company, the Operating Partnership and the Advisor (the “ Advisory Agreement ”) has been duly authorized, executed and delivered by the Company and the Operating Partnership and constitutes a legal, valid and binding agreement of the Company and the Operating Partnership enforceable against the Company and the Operating Partnership in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general principles of equity.

 

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(xiv)                        No Consents; No Approvals .  No approval, authorization, consent or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency or any other third party is required in connection with the Company’s or the Operating Partnership’s execution, delivery and performance of this Agreement, their consummation of the transactions contemplated herein or the Company’s sale and delivery of the Securities, other than (i) such as have been obtained, or will have been obtained at the Closing Time or the relevant Date of Delivery, as the case may be, under the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, (ii) such approvals as have been obtained in connection with the approval of the listing of the Securities and the Conversion Shares (as defined below) on the New York Stock Exchange (“ NYSE ”), (iii) such approvals as have been obtained under the rules of the Financial Industry Regulatory Authority (“ FINRA ”), (iv) any necessary qualification under the securities or blue sky laws of the various state jurisdictions in which the Securities are being offered by the Underwriters, and (v) such approvals, authorizations, consents or orders or filings, the absence of which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(xv)                           Licenses .  Each of the Company and the subsidiaries has all necessary licenses, authorizations, consents and approvals and has made all necessary filings required under any federal, state, local or foreign law, regulation or rule, and has obtained all necessary authorizations, consents and approvals from other persons, required in order to conduct their respective businesses as described in the Registration Statement, the General Disclosure Package and the Prospectus, except to the extent that any failure to have any such licenses, authorizations, consents or approvals, to make any such filings or to obtain any such authorizations, consents or approvals could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Neither the Company nor any of the subsidiaries is in violation of, in default under, or has received any notice regarding a possible violation, default or revocation of any such license, authorization, consent or approval or any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to the Company or any of the subsidiaries, the effect of which could reasonably be expected to result in a Material Adverse Effect.  No such license, authorization, consent or approval contains a materially burdensome restriction that is not adequately disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.  Neither the Company nor any of the subsidiaries is required by any applicable law to obtain accreditation or certification from any governmental agency or authority in order to provide the products and services that it currently provides or that it proposes to provide as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, except to the extent that any failure to have such accreditation or certification could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(xvi)                        Emerging Growth Company Status .  From the time of the initial filing of the Registration Statement to the Commission through the date hereof, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of the 1933 Act (an “ Emerging Growth Company ”).

 

(xvii)                     Accurate Disclosure .  Neither the Registration Statement nor any amendment thereto, at the times they became effective, at the Closing Time or at any Date of Delivery, contained, contains or will contain an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  As of the Applicable Time, neither (A) the General Disclosure Package nor (B) any individual Issuer Limited Use Free Writing Prospectus, when considered together with the General Disclosure Package, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the

 

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statements therein, in the light of the circumstances under which they were made, not misleading.  Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper), as of its issue date, at the time of any filing with the Commission pursuant to Rule 424(b), at the Closing Time or at any Date of Delivery, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The documents incorporated or deemed to be incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, when read together with the other information in the Registration Statement, the General Disclosure Package or the Prospectus, as the case may be, (a) at the time the Registration Statement became effective, (b) at the earlier of the time the Prospectus was first used and the date and time of the first contract of sale of Securities and (c) at the Closing Time or at any Date of Delivery, did not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

The representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement (or any amendment thereto), the General Disclosure Package, any individual Issuer Limited Use Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto (including any prospectus wrapper)), made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use therein.  For purposes of this Agreement, the only information so furnished shall be the information in the first paragraph under the heading “Underwriting—Commissions and Discounts” and the information in the second and third paragraphs and in the last sentence of the fourth paragraph under the heading “Underwriting—Price Stabilization, Short Positions and Penalty Bids” in the Prospectus (collectively, the “ Underwriter Information ”).

 

(xviii)                  Issuer Free Writing Prospectuses .  No Issuer Free Writing Prospectus conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, including any document incorporated or deemed incorporated by reference therein, and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified.

 

(xix)                        Ineligible Issuer .  At the time of filing the Registration Statement and any post-effective amendment thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the 1933 Act Regulations) of the Securities and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405, without taking account of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an ineligible issuer.

 

(xx)                           No Litigation .  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there are no actions, suits, proceedings, inquiries or investigations pending or, to the knowledge of the Company, threatened against the Company, any subsidiary or any of their respective officers and directors or to which the properties, assets or rights of any such entity are subject, at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or agency, which is required to be disclosed in the Registration Statement, or where in any such case (i) there is a reasonable possibility that such action, suit or proceeding will be determined adversely to the

 

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Company or such subsidiary and (ii) if so determined adversely, could reasonably be expected to result in a judgment, decree, award or order having a Material Adverse Effect.

 

(xxi)                        Financial Statements; Non-GAAP Financial Measures .  The financial statements included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, together with the related schedules and notes, present fairly: (1) the financial position of the Company and the Operating Partnership on a consolidated basis at the dates indicated; and (2) the several statements of operations, comprehensive income (loss), equity (deficit) and cash flows for the Bardessono Inn & Spa in Yountville, California for the periods specified; said financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved.  The supporting schedules, if any, present fairly in accordance with GAAP the information required to be stated therein.  The selected financial data and any summary financial information included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included therein.  The pro forma financial statements and the related notes thereto included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission’s rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein.  The pro forma financial statements in the Registration Statement comply as to form in all material respects with the applicable requirements of Regulation S-X of the 1933 Act.  No other financial statements or supporting schedules of the Company or any of its subsidiaries are required to be included in or incorporated by reference the Registration Statement, the General Disclosure Package or the Prospectus under the 1933 Act or the 1933 Act Regulations.  All disclosures contained in the Registration Statement, the General Disclosure Package or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply with Regulation G of the 1934 Act and Item 10 of Regulation S-K of the 1933 Act, to the extent applicable. The interactive data in eXtensible Business Reporting Language incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, if any, fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto.

 

(xxii)                     Independent Public Accountants .  The accountants who certified the financial statements and supporting schedules included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus are, and were during the periods covered by their reports, registered independent public accountants as and to the extent required by the 1933 Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations and the Public Company Accounting Oversight Board (United States).

 

(xxiii)                  Description of Securities .  The Series B Preferred Stock conforms in all material respects to the description thereof contained in the Registration Statement, the General Disclosure Package and the Prospectus and such description conforms in all material respects to the rights set forth in the instruments defining the same.

 

(xxiv)                 Registration Rights .  Except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, there are no persons with registration rights or other similar rights to have any equity or debt securities, including securities that are convertible

 

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into or exchangeable or redeemable for equity securities, registered for sale pursuant to the Registration Statement or otherwise registered for sale by the Company or the Operating Partnership under the 1933 Act.

 

(xxv)                    Valid Issuance of Securities .  The Securities to be purchased by the Underwriters from the Company have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and, when issued and duly delivered by the Company pursuant to this Agreement against payment of the consideration set forth herein, will be validly issued, fully paid and non-assessable, free and clear of any pledge, lien, encumbrance, security interest or other claim; and the issuance and sale of the Securities by the Company is not subject to the preemptive, resale rights, rights of first refusal or other similar rights arising by operation of law, under the organizational documents of the Company or under any agreement to which the Company or any subsidiary is a party or otherwise.

 

(xxvi)                 Authorization of Common Stock Upon Conversion .  The shares of Common Stock issuable upon conversion of the Securities (the “ Conversion Shares ”) have been duly authorized and, when issued upon conversion of the Securities in accordance with the terms of the Articles Supplementary, will be validly issued and fully paid and non-assessable; and the issuance of the Conversion Shares will not be subject to the preemptive, resale rights, rights of first refusal or other similar rights of any securityholder of the Company.  The Conversion Shares conform in all material respects to all statements relating thereto contained in the Registration Statement, the General Disclosure Package and the Prospectus and such description conforms in all material respects to the rights set forth in the instruments defining the same.  No holder of the Conversion Shares will be subject to personal liability by reason of being such a holder.  The Company has duly and validly reserved such Conversion Shares for issuance upon conversion of the Securities.  The certificates to be used to evidence title to the Conversion Shares will be in substantially the form filed or incorporated by reference, as the case may be, as an exhibit to the Registration Statement.

 

(xxvii)              Registration and Listing of Securities and Conversion Shares .  At or before the Closing Time, the Securities and the Conversion Shares will have been registered under Section 12(b) of the 1934 Act and approved for listing on the NYSE, subject to official notice of issuance.

 

(xxviii)           Absence of Manipulation .  Neither the Company nor any affiliate of the Company has taken, nor will the Company or any affiliate take, directly or indirectly, any action which is designed, or would be expected, to cause or result in, or which constitutes, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or to result in a violation of Regulation M under the 1934 Act.

 

(xxix)                 No Registration as Broker .  Neither the Company nor any of its affiliates (i) is required to register as a “broker” or “dealer” in accordance with the provisions of the 1934 Act or the 1934 Act Regulations, or (ii) directly, or indirectly through one or more intermediaries, controls or has any other association with (within the meaning of Article I of the By-laws of FINRA) any member firm of FINRA.

 

(xxx)                    No Exempt Sales .  Except as described in the Registration Statement, the General Disclosure Package and the Prospectus, neither the Company nor any subsidiary has sold or issued any securities during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the 1933 Act, other than shares issued pursuant to employee benefit plans, qualified stock options plans or other employee

 

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compensation plans or pursuant to outstanding options, rights or warrants, that would not be required to be integrated with the sale of the Securities.

 

(xxxi)                 Form of Certificate .  The form of certificate used to evidence the Series B Preferred Stock will be in substantially the form filed or incorporated by reference, as the case may be, as an exhibit to the Registration Statement, and complies in all material respects with all applicable statutory requirements, with any applicable requirements of the organizational documents of the Company and the requirements of the NYSE.

 

(xxxii)              Property .  The Company and its subsidiaries have good and indefeasible title in fee simple to, or a valid leasehold interest in, all real property described in the Registration Statement, the General Disclosure Package and the Prospectus, and good title to all personal property owned by them, in each case free and clear of all liens, security interests, pledges, charges, encumbrances, encroachments, restrictions, mortgages and defects, except such as are disclosed in the Registration Statement, the General Disclosure Package and the Prospectus or such as do not materially and adversely affect the value of such property and do not interfere with the use made or proposed to be made of such property by the Company and its subsidiaries.  Any real property, improvements, equipment and personal property held under lease by the Company or any subsidiary are held under valid, existing and enforceable leases, with such exceptions as are disclosed in the Registration Statement, the General Disclosure Package and the Prospectus or are not material and do not interfere with the use made or proposed to be made of such real property, improvements, equipment and personal property by the Company or such subsidiary.  The Company or a subsidiary has obtained an owner’s or leasehold title insurance policy, from a title insurance company licensed to issue such policy, on any real property owned in fee or leased, as the case may be, by the Company or any subsidiary, that insures the Company’s or the subsidiary’s fee or leasehold interest, as the case may be, in such real property, which policies include only commercially reasonable exceptions, and with coverages in amounts at least equal to amounts that are generally deemed in the Company’s industry to be commercially reasonable in the markets where the Company’s properties are located, or a lender’s title insurance policy insuring the lien of its mortgage securing the real property with coverage equal to the maximum aggregate principal amount of any indebtedness held by the Company or a subsidiary and secured by the real property.

 

(xxxiii)           Condition of Real Property .  All real property owned or leased by the Company or a subsidiary is free of material structural defects and all building systems contained therein are in good working order in all material respects, subject to ordinary wear and tear or, in each instance, the Company has created an adequate reserve to effect reasonably required repairs, maintenance and capital expenditures.  To the knowledge of the Company and the Operating Partnership, water, storm water, sanitary sewer, electricity and telephone service are all available at the property lines of such property over duly dedicated streets or perpetual easements of record benefiting such property.  Except as described in the Registration Statement, the General Disclosure Package and the Prospectus, to the knowledge of the Company and the Operating Partnership, there is no pending or threatened special assessment, tax reduction proceeding or other action that, individually or in the aggregate, could reasonably be expected to increase or decrease the real property taxes or assessments of any of such property, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(xxxiv)          Mortgages .  The Company has provided to the Representatives true and complete copies of all credit agreements, mortgages, deeds of trust, guaranties, side letters, and other documents evidencing, securing or otherwise relating to any secured or unsecured indebtedness of the Company or any of its subsidiaries (collectively, the “ Loan Documents ”), and none of the

 

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Company and its subsidiaries that is party to any of the Loan Documents is in default thereunder, nor has an event occurred which with the passage of time or the giving of notice, or both, would become a default by any of them under any of the Loan Documents, except for any default that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  The Loan Documents encumbering any real property owned in fee or leased by the Company or a subsidiary (i) are not convertible (in the absence of foreclosure) into an equity interest in the real property or in the Company, the Operating Partnership or any subsidiary, and none of the Company, the Operating Partnership or the subsidiaries hold a participating interest therein, (ii) except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, are not and will not be cross-defaulted to any indebtedness other than indebtedness of the Company or any of the subsidiaries, and (iii) are not and will not be cross-collateralized to any property not owned by the Company, the Operating Partnership or any of the subsidiaries.

 

(xxxv)             Description and Enforceability of Contracts .  The statements in the Registration Statement, the General Disclosure Package and the Prospectus under the headings “Summary—Recent Developments,” “Summary—The Offering,” “Risk Factors,” “Description of the Series B Preferred Stock,” “Description of Capital Stock,” “Material Provisions of Maryland Law and of Our Charter and Bylaws,” “Partnership Agreement,” “Distribution Policy,” “Additional Federal Income Tax Considerations,” “Description of Common Stock,” “Description of Preferred Stock,” “Restrictions on Ownership and Transfer,” and “Material Federal Income Tax Considerations,” insofar as such statements summarize legal matters, agreements, documents, proceedings or affiliate transactions discussed therein, are accurate and fair summaries of such legal matters, agreements, documents, proceedings or affiliate transactions in all material respects.  There are no contracts, leases or other documents which are required to be described in the Registration Statement, the General Disclosure Package or the Prospectus or to be filed as exhibits to the Registration Statement, which have not been so described and filed as required.  All agreements between the Company or any of its subsidiaries and any other party expressly referenced in the Registration Statement, the General Disclosure Package and the Prospectus are legal, valid and binding obligations of the Company or such subsidiary, as applicable, enforceable against the Company or such subsidiaries, as applicable, as appropriate, in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles and, to the knowledge of the Company and the Operating Partnership, no party is in breach or default under any such agreements, except for any breach or default that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

(xxxvi)          Intellectual Property .  The Company and each subsidiary owns or possesses adequate licenses or other rights to use all patents, trademarks, service marks, trade names, copyrights, software and design licenses, trade secrets, manufacturing processes, other intangible property rights and know-how (collectively, “ Intangibles ”) necessary to entitle the Company and each subsidiary to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus, and neither the Company nor any subsidiary has received notice of infringement of or conflict with (and the Company knows of no such infringement of or conflict with) asserted rights of others with respect to any Intangibles that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(xxxvii)       Disclosure Controls; Internal Controls .  The Company, the Operating Partnership and the subsidiaries have established and maintain disclosure controls and procedures (as such term is defined in Rule 13a-15 and 15d-15 under the 1934 Act Regulations).  Such disclosure

 

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controls and procedures are designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s Chief Executive Officer and its Chief Financial Officer by others within those entities, and such disclosure controls and procedures are effective to perform the functions for which they were established.  The Company, the Operating Partnership and the subsidiaries have established and maintain effective internal control over financial reporting (as such term is defined in Rule 13a-15 and 15d-15 under the 1934 Act Regulations).  Such internal control over financial reporting is designed to provide reasonable assurance that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of:  (i) any significant deficiencies and material weaknesses in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s internal controls; and, except as described in the Registration Statement, the General Disclosure Package and the Prospectus, since the Company’s inception, there has been (1) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (2) no significant changes in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting, including any corrective actions with regard to significant deficiencies.

 

(xxxviii)    Compliance with the Sarbanes-Oxley Act.   There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the “ Sarbanes-Oxley Act ”), including Section 402 related to loans and Sections 302 and 906 related to certifications.

 

(xxxix)          Taxes .  Each of the Company, the Operating Partnership and their subsidiaries has filed on a timely basis (including in accordance with any applicable extensions) all necessary federal, state, local and foreign income and franchise tax returns required to be filed through the date hereof or have properly requested extensions thereof, and have paid all taxes shown as due thereon, and if due and payable, any related or similar assessment, fine or penalty levied against the Company, the Operating Partnership or any of the subsidiaries.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, no tax deficiency has been asserted against any such entity, and the Company, the Operating Partnership and their subsidiaries do not know of any tax deficiency that is likely to be asserted against any such entity that, individually or in the aggregate, if determined adversely to any such entity, could reasonably be expected to have a Material Adverse Effect.  All tax liabilities are adequately provided for on the respective books of the Company and the subsidiaries.

 

(xl)                               Insurance .  Each of the Company and the subsidiaries maintains insurance (issued by insurers of recognized financial responsibility) of the types and in the amounts generally deemed adequate for their respective businesses and consistent with insurance coverage maintained by similar companies in similar businesses, including, but not limited to, insurance covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction, environmental liabilities, acts of vandalism, terrorism, earthquakes,

 

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flood and all other risks customarily insured against, all of which insurance is in full force and effect.

 

(xli)                            Environmental Law Compliance .  Neither the Company nor any of the subsidiaries is in violation, or has received notice of any violation with respect to, any applicable environmental, safety or similar law, regulation or rule applicable to the business of the Company or any of the subsidiaries, except any such violation of law, regulation or rule that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  The Company and the subsidiaries have received all permits, licenses or other approvals required of them under applicable federal and state occupational safety and health and environmental laws, regulations and rules to conduct their respective businesses, and the Company and the subsidiaries are in compliance with all terms and conditions of any such permit, license or approval, except any such violation of law, regulation or rule, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals that individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  Except as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, (i) none of the Operating Partnership, the Company, any of the subsidiaries nor, to the knowledge of the Operating Partnership and the Company, any other owners of the property at any time or any other party has at any time, handled, stored, treated, transported, manufactured, spilled, leaked, or discharged, dumped, transferred or otherwise disposed of or dealt with, Hazardous Materials (as hereinafter defined) on, in, under, to or from any real property leased, owned or controlled, including any real property underlying any loan held or to be held by the Company or the subsidiaries (collectively, the “ Real Property ”), other than by any such action taken in compliance with all applicable Environmental Statutes (hereinafter defined) or by the Operating Partnership, the Company, any of the subsidiaries or any other party in connection with the ordinary use of residential, retail or commercial properties owned by the Operating Partnership; (ii) the Operating Partnership and the Company do not intend to use the Real Property or any subsequently acquired properties for the purpose of using, handling, storing, treating, transporting, manufacturing, spilling, leaking, discharging, dumping, transferring or otherwise disposing of or dealing with Hazardous Materials other than by any such action taken in compliance with all applicable Environmental Statues or by the Operating Partnership, the Company, any of the subsidiaries or any other party in connection with the ordinary use of residential, retail or commercial properties owned by the Operating Partnership; (iii) none of the Operating Partnership, the Company, nor any of the subsidiaries knows of any seepage, leak, discharge, release, emission, spill, or dumping of Hazardous Materials into waters on or adjacent to the Real Property or any other real property owned or occupied by any such party, or onto lands from which Hazardous Materials might seep, flow or drain into such waters; (iv) none of the Operating Partnership, the Company, nor any of the subsidiaries has received any notice of, or has any knowledge of any occurrence or circumstance that, with notice or passage of time or both, would give rise to a claim under or pursuant to any federal, state or local environmental statute, regulation or rule or under common law, pertaining to Hazardous Materials on or originating from any of the Real Property or any assets described in the Prospectus or any other real property owned or occupied by any such party or arising out of the conduct of any such party, including without limitation a claim under or pursuant to any Environmental Statute; (v) the Real Property is not included or, to the Company’s and the Operating Partnership’s knowledge, proposed for inclusion on the National Priorities List issued pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601-9675 (the “ CERCLA ”) by the United States Environmental Protection Agency or, to the Operating Partnership’s and the Company’s knowledge, proposed for inclusion on any similar list or inventory issued pursuant to any other Environmental Statute or issued by any other Governmental Authority (as hereinafter defined);

 

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(vi) in the operation of the Company’s and the Operating Partnership’s businesses, the Company acquires, before acquisition of any real property, an environmental assessment of the real property and, to the extent they become aware of any condition that could reasonably be expected to result in liability associated with the presence or release of a Hazardous Material, or any violation or potential violation of any Environmental Statute, the Company and the Operating Partnership take all commercially reasonable action necessary or advisable (including any capital improvements) for clean-up, closure or other compliance with such Environmental Statute.  There are no costs or liabilities associated with the Real Property pursuant to any Environmental Statute (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with any Environmental Statute or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  None of the entities that prepared Phase I or other environmental assessments with respect to the Real Property was employed for such purpose on a contingent basis or has any substantial interest in the Company or any of the subsidiaries, and none of their directors, officers or employees is connected with the Company or any of the subsidiaries as a promoter, selling agent, trustee, officer, director or employee.  None of the Operating Partnership, the Company nor any subsidiary knows of any violation of any municipal, state or federal law, rule or regulation (including those pertaining to environmental matters) concerning the Real Property or any part thereof that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  The Real Property complies with all applicable zoning laws, ordinances, regulations and deed restrictions or other covenants in all material respects and, if and to the extent there is a failure to comply, such failure does not materially impair the value of any of the Real Property and will not result in a forfeiture or reversion of title.  None of the Operating Partnership, the Company nor any subsidiary has received from any governmental authority any written notice of any condemnation of or zoning change affecting the Real Property or any part thereof, and none of the Operating Partnership, the Company nor any subsidiary knows of any such condemnation or zoning change which is threatened and which, individually or in the aggregate, if consummated could reasonably be expected to have a Material Adverse Effect.  All liens, charges, encumbrances, claims, or restrictions on or affecting the properties and assets (including the Real Property) of the Operating Partnership or any of the subsidiaries that are required to be described in the Prospectus are disclosed therein.  No lessee of any portion of any of the Real Property is in default under any of the leases governing such properties and there is no event which, but for the passage of time or the giving of notice or both would constitute a default under any of such leases, except such defaults that individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  No tenant under any lease pursuant to which the Operating Partnership or any of the subsidiaries leases any Real Property has an option or right of first refusal to purchase the premises leased thereunder or the building of which such premises are a part, except as such options or rights of first refusal that, individually or in the aggregate, if exercised, could not reasonably be expected to have a Material Adverse Effect.

 

As used herein, “ Hazardous Material ” includes, without limitation any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, toxic substances, or related materials, asbestos or any hazardous material as defined by any federal, state or local environmental law, regulation or rule including, without limitation, the CERCLA, the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections 1801-1819, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901-6992K, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11050, the Toxic Substances Control Act, 15 U.S.C. Sections 2601-2671, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections 136-136y, the Clean Air Act, 42 U.S.C. Sections 7401-7642, the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. Sections 1251-1387,

 

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the Safe Drinking Water Act, 42 U.S.C. Sections 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. Sections 651-678, as any of the above statutes may be amended from time to time, and in the regulations promulgated pursuant to each of the foregoing (individually, an “Environmental Statute” and collectively the “ Environmental Statutes ”) or by any federal, state or local governmental authority having or claiming jurisdiction over the properties and assets described in the General Disclosure Package or the Prospectus (a “ Governmental Authority ”).

 

(xlii)                         Labor Laws; No Labor Disputes .  Neither the Company nor any of its subsidiaries is in violation of or has received notice of any violation with respect to any federal or state law, regulation or rule relating to discrimination in the hiring, termination, promotion, employment or pay of employees, nor any applicable federal or state wages and hours law, nor any state law, regulation or rule precluding the denial of credit due to the neighborhood in which a property is situated, the violation of any of which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There are no existing or, to the knowledge of the Company or the Operating Partnership, threatened labor disputes with the employees of the Company or any of its subsidiaries that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(xliii)                      ERISA .  The Company and each of its subsidiaries are in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ ERISA ”).  No “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company or any of the subsidiaries would have any material liability; the Company and each of the subsidiaries have not incurred and do not expect to incur material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (ii) Section 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (collectively, the “ Code ”).  Each “pension plan” for which the Company or any of its subsidiaries would have any material liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, that would cause the loss of such qualification.

 

(xliv)                     Past Issuances of Securities .  All securities issued by the Company, any of the subsidiaries or any trusts established by the Company or any subsidiary, have been issued and sold in compliance with (i) all applicable federal and state securities laws and the laws of the applicable jurisdiction of incorporation of the issuing entity, except as, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, and (ii) to the extent applicable to the issuing entity, the requirements of the NYSE.

 

(xlv)                        1933 Act Compliance .  In connection with this offering, the Company has not offered and will not offer its Series B Preferred Stock or any other securities convertible into or exchangeable or exercisable or redeemable for Series B Preferred Stock in a manner in violation of the 1933 Act; the Company has not distributed and will not distribute any prospectus or other offering material in connection with the offering of the Securities other than the Registration Statement, the Prospectus and any Issuer General Use Free Writing Prospectus.

 

(xlvi)                     Prior Sales of Preferred Stock or Preferred Units .  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, neither the Company nor the Operating Partnership has sold, issued or distributed any shares of Series B Preferred Stock or Series B Preferred Units.

 

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(xlvii)                  No Finder’s Fee .  Except for the Underwriters’ discounts and commissions payable by the Company to the Underwriters in connection with the offering of the Securities contemplated herein or as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company has not incurred any liability for any brokerage commission, finder’s fees or similar payments in connection with the offering of the Securities contemplated hereby.

 

(xlviii)               Absence of Certain Relationships .  There is no relationship, direct or indirect, between or among the Company or any of its subsidiaries on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any of the subsidiaries on the other hand, which is required by the 1933 Act and the 1933 Act Regulations to be described in the Registration Statement, the General Disclosure Package or the Prospectus and which is not so described. The Company has not, directly or indirectly, including through any subsidiary, extended or maintained credit, arranged for the extension of credit, or renewed an extension of credit, in the form of a personal loan to or for any executive officer or director of the Company.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company has no lending or other commercial relationship with any affiliate of any Underwriter and the Company will not use any of the proceeds from the sale of the Securities to repay any indebtedness owed to any affiliate of any Underwriter.

 

(xlix)                     Investment Company Act .  Neither the Company nor the Operating Partnership is required, or upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the General Disclosure Package and the Prospectus will be required, to register as an “investment company” under the Investment Company Act of 1940, as amended (the “ 1940 Act ”).

 

(l)                                      REIT Status .  Commencing with the taxable year ended December 31, 2013, the Company has been organized and operated in conformity with the requirements for qualification and taxation as a real estate investment trust (a “ REIT ”) under the Code, and the current and proposed ownership and method of operation of the Company and the subsidiaries as described in the Registration Statement, the General Disclosure Package and the Prospectus will enable the Company to continue to meet the requirements for qualification and taxation as a REIT under the Code for the Company’s taxable years ending December 31, 2017 and thereafter. The Operating Partnership is and will be treated as a partnership within the meaning of Sections 7701(a)(2) and 761(a) of the Code and not as a publicly traded partnership taxable as a corporation under Section 7704 of the Code.  The Company intends to continue to qualify as a REIT for all subsequent years, and the Company does not know of any event that could reasonably be expected to cause the Company to fail to qualify as a REIT at any time.

 

(li)                                   Ashford Trust REIT Status .  Ashford Hospitality Trust, Inc. qualified to be taxed as a REIT for its taxable years ended December 31, 2009 through December 31, 2013.

 

(lii)                                Foreign Corrupt Practices Act .  None of the Company, any of its subsidiaries, or, to the knowledge of the Company, any director, officer, affiliate, agent, employee or other person acting on behalf of the Company is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “ FCPA ”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official

 

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thereof or any candidate for foreign political office, in contravention of the FCPA and the Company and its subsidiaries and, to the knowledge of the Company, its affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

(liii)                             Money Laundering Laws .  The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of all jurisdictions, the rules and regulations thereunder and any applicable related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the “ Money Laundering Laws ”); and no action, suit or proceeding by or before any Governmental Authority involving the Company or any subsidiary with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

(liv)                            OFAC .  None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, affiliate, agent, employee or representative of the Company or any of its subsidiaries is an individual or entity (“ Person ”) that is, or is owned or controlled by a Person that is: (i) currently the subject or target of any sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“ OFAC ”), the United Nations Security Council (“ UNSC ”), the European Union, Her Majesty’s Treasury (“ HMT ”), or other relevant sanctions authority (collectively, “ Sanctions ”), nor (ii) located, organized or resident in a country or territory that is the subject of Sanctions; and the Company and the Operating Partnership will not directly or indirectly use the proceeds of the sale of the Securities, or lend, contribute or otherwise make available such proceeds to any subsidiaries, joint venture partners or other Person, to fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. Since inception, the Company and its subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

 

(lv)                               Statistical and Market-Related Data .  Any statistical and market-related data included in the Registration Statement, the General Disclosure Package or the Prospectus are based on or derived from sources that the Company believes, after reasonable inquiry, to be reliable and accurate and, to the extent required, the Company has obtained the written consent to the use of such data from such sources.

 

(lvi)                            Governmental Oversight .  The conduct of business by the Company and the subsidiaries as presently and proposed to be conducted is not subject to continuing oversight, supervision, regulation or examination by any governmental official or body of the United States or any other jurisdiction wherein the Company or the subsidiaries conduct or propose to conduct such business, except as described in the Registration Statement, the General Disclosure Package and the Prospectus and except such regulation as is applicable to commercial enterprises generally.

 

(lvii)                         Distribution of Offering Material .  The Company and its subsidiaries have not distributed, and prior to the later of the Closing Time and the completion of the distribution of the

 

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Securities, will not distribute, any offering material in connection with the offering or sale of the Securities other than any preliminary prospectus, the Prospectus, any Issuer Free Writing Prospectus, or any other materials, if any, permitted by the 1933 Act.

 

(b)          The Advisor represents and warrants to each Underwriter as of the date hereof, the Applicable Time, the Closing Time and any Date of Delivery, and agrees with each Underwriter, as follows:

 

(i)                                      Registration Statement and Prospectuses .  No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the 1933 Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the knowledge of the Advisor, contemplated.

 

(ii)                                   Good Standing of Advisor .  The Advisor has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware and has the limited liability company power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement.  The Advisor has no subsidiaries.  The Advisor is duly qualified as a foreign limited liability company to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to be so qualified could not (A) reasonably be expected to have, individually or in the aggregate, a material adverse effect on the assets, business, operations, earnings, management, properties, condition (financial or otherwise) or prospects of the Advisor or (B) prevent the consummation of the transactions contemplated hereby (the occurrence of any such effect or any such prevention described in the foregoing clauses (A) and (B) being referred to as an “ Advisor Material Adverse Effect ”).

 

(iii)                                No Material Adverse Change .  Except as otherwise stated therein, since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package or the Prospectus, (A) there has not been any Advisor Material Adverse Effect and (B) there has not been any material transaction entered into or any material transaction that is probable of being entered into by the Advisor, other than transactions in the ordinary course of business and transactions described in the Registration Statement, the General Disclosure Package and the Prospectus, as each may be amended or supplemented.

 

(iv)                               Compliance with Laws .  The Advisor is in compliance with all applicable federal, state, local or foreign laws, regulations, rules, decrees, judgments and orders, including those relating to transactions with affiliates, except where any failures to be in compliance could not, individually or in the aggregate, reasonably be expected to have an Advisor Material Adverse Effect.

 

(v)                                  No Defaults . The Advisor is not in breach of or in default under (nor has any event occurred which with notice, lapse of time, or both would constitute a breach of, or default under) (A) its certificate of formation or limited liability company agreement, or (B) in the performance or observance of any obligation, agreement, covenant or condition contained in any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Advisor is a party or by which it or its properties is bound, except in the case of clause (B), for such breaches or defaults that, individually or in the aggregate, could not reasonably be expected to have an Advisor Material Adverse Effect.

 

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(vi)                               No Conflicts . The execution, delivery and performance of this Agreement and consummation of the transactions contemplated herein will not (i) conflict with, or result in any breach of, or constitute a default under (nor constitute any event which with notice, lapse of time, or both would constitute a breach of, or default under), (A) any provision of the certificate of formation or limited liability company agreement of the Advisor, or (B) any provision of any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Advisor is a party or by which the Advisor or its assets or properties may be bound or affected, or under any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to the Advisor, except in the case of this clause (B) for such breaches or defaults that, individually or in the aggregate, could not reasonably be expected to have an Advisor Material Adverse Effect; or (ii) result in the creation or imposition of any lien, charge, claim or encumbrance upon any property or asset of the Company or any subsidiary.

 

(vii)                            Due Authorization of Agreement .  This Agreement has been duly authorized, executed and delivered by the Advisor and is a legal, valid and binding agreement of the Advisor.

 

(viii)                         Advisory Agreement . The Advisory Agreement has been duly authorized, executed and delivered by the Advisor and constitutes a legal, valid and binding agreement of the Advisor enforceable against the Advisor in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general principles of equity.

 

(ix)                               No Consents; No Approvals .  No approval, authorization, consent or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency or any other third party is required in connection with the Advisor’s execution, delivery and performance of this Agreement and its consummation of the transactions contemplated herein.

 

(x)                                  Licenses .  The Advisor has all necessary licenses, authorizations, consents and approvals and has made all necessary filings required under any federal, state, local or foreign law, regulation or rule, and has obtained all necessary authorizations, consents and approvals from other persons, required in order to conduct its businesses as described in the Registration Statement, the General Disclosure Package and the Prospectus, except to the extent that any failure to have any such licenses, authorizations, consents or approvals, to make any such filings or to obtain any such authorizations, consents or approvals could not, individually or in the aggregate, reasonably be expected to have an Advisor Material Adverse Effect.  The Advisor is not in violation of, in default under, and has not received any notice regarding a possible violation, default or revocation of any such license, authorization, consent or approval or any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to the Advisor, the effect of which could reasonably be expected to result in an Advisor Material Adverse Effect.  No such license, authorization, consent or approval contains a materially burdensome restriction that is not adequately disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.  The Advisor is not required by any applicable law to obtain accreditation or certification from any governmental agency or authority in order to provide the products and services that it currently provides or that it proposes to provide as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, except to the extent that any failure to have such accreditation or certification could not, individually or in the aggregate, reasonably be expected to have an Advisor Material Adverse Effect.

 

(xi)                               Absence of Free Writing Prospectus .  The Advisor (including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared or had

 

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prepared on its behalf or used or referred to any “free writing prospectus” as defined in Rule 405 under the 1933 Act and has not distributed any written materials in connection with the offer or sale of the Securities.

 

(xii)                            No Litigation .  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there are no actions, suits, proceedings, inquiries or investigations pending or, to the knowledge of the Advisor, threatened against the Company, any subsidiary or the Advisor or any of their respective officers and directors or to which the properties, assets or rights of any such entity are subject, at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or agency, which is required to be disclosed in the Registration Statement, or where in any such case (i) there is a reasonable possibility that such action, suit or proceeding will be determined adversely to the Advisor and (ii) if so determined adversely, could reasonably be expected to result in a judgment, decree, award or order having a Material Adverse Effect.

 

(xiii)                         Absence of Manipulation .  Neither the Advisor nor any affiliate of the Advisor has taken, nor will the Advisor or any affiliate of the Advisor take, directly or indirectly, any action which is designed, or would be expected, to cause or result in, or which constitutes, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or to result in a violation of Regulation M under the 1934 Act.

 

(xiv)                        Internal Controls .  The Advisor maintains a system of internal control in place sufficient to provide reasonable assurance that:  (i) transactions that may be effectuated by the Advisor under the Advisory Agreement are executed in accordance with its management’s general or specific authorization and (ii) access to the Company’s assets is permitted only in accordance with the internal policies, controls and procedures of the Advisor.

 

(xv)                           Insurance .  The Advisor maintains insurance (issued by insurers of recognized financial responsibility) of the types and in the amounts generally deemed adequate for its businesses and consistent with insurance coverage maintained by similar companies in similar businesses, including, but not limited to, insurance covering real and personal property owned or leased by the Advisor against theft, damage, destruction, environmental liabilities, acts of vandalism, terrorism, earthquakes, flood and all other risks customarily insured against, all of which insurance is in full force and effect.

 

(xvi)                        Labor Laws; Absence of Labor Dispute .  The Advisor has not been notified that any officer or other key person of the Company, or a significant number of employees of the Advisor and its affiliates, plan to terminate his, her or their employment.  Neither the Advisor nor, to the Advisor’s knowledge, any officer or other key person of the Company, is subject to any noncompete, nondisclosure, confidentiality, employment, consulting or similar agreement that would be violated by the present or proposed business activities of the Company or the Advisor as described in the Registration Statement, the General Disclosure Package and the Prospectus. The Advisor is not in violation of and has not received notice of any violation with respect to any federal or state law, regulation or rule relating to discrimination in the hiring, termination, promotion, employment or pay of employees, nor any applicable federal or state wages and hours law, nor any state law, regulation or rule precluding the denial of credit due to the neighborhood in which a property is situated, the violation of any of which, individually or in the aggregate, could reasonably be expected to have an Advisor Material Adverse Effect.  There are no existing or, to the knowledge of the Advisor, threatened labor disputes with the employees of the Advisor that could reasonably be expected to have, individually or in the aggregate, an Advisor Material Adverse Effect.

 

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(xvii)                     No Finder’s Fee .  Except for the Underwriters’ discounts and commissions payable by the Company to the Underwriters in connection with the offering of the Securities contemplated herein or as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Advisor has not incurred any liability for any brokerage commission, finder’s fees or similar payments in connection with the offering of the Securities contemplated hereby.

 

(xviii)                  Absence of Certain Relationships .  No relationship, direct or indirect, exists between or among the Advisor, on the one hand, and the directors, officers, stockholders, customers or suppliers of the Advisor, on the other, that is required by the 1933 Act or the 1933 Act Regulations to be described in the Registration Statement, the General Disclosure Package and the Prospectus that is not so described in such documents.

 

(xix)                        Investment Advisers Act . The Advisor is not prohibited by the Investment Advisers Act of 1940, as amended, or the rules and regulations thereunder, from performing its obligations under the Advisory Agreement, as described in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(xx)                           Statistical and Market-Related Data .  Any statistical and market-related data included in the Registration Statement, the General Disclosure Package or the Prospectus are based on or derived from sources that the Advisor believes, after reasonable inquiry, to be reliable and accurate.

 

(xxi)                        Access to Resources .  The Advisor will have access to the personnel and other resources necessary for the performance of the duties of the Advisor as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(c)                                   Officer’s Certificates .  Any certificate signed by any officer of the Company or the Advisor delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty by the Company, the Operating Partnership and the Advisor to each Underwriter as to the matters covered thereby.

 

SECTION 2.                             Sale and Delivery to Underwriters; Closing .

 

(a)                                  Initial Securities .  On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company, agrees to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Company, at the price per share set forth in Schedule B , that number of Initial Securities set forth in Schedule A opposite the name of such Underwriter, plus any additional number of Initial Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof, subject, in each case, to such adjustments among the Underwriters as the Representatives in their sole discretion shall make to eliminate any sales or purchases of fractional shares.

 

(b)                                  Option Securities .  In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriters, severally and not jointly, to purchase up to an additional 296,250 shares of Series B Preferred Stock, on the same basis as set forth in Section 2(a) of this Agreement, less an amount per share equal to any dividends or distributions declared by the Company and payable on the Initial Securities but not payable on the Option Securities.  The option hereby granted may be exercised for 30 days after the date hereof and may be exercised in whole or in part at any time from time to time upon notice by the Representatives to the Company setting forth the number of Option Securities as to which the several

 

23

 

Underwriters are then exercising the option and the time and date of payment and delivery for such Option Securities.  Any such time and date of delivery (a “ Date of Delivery ”) shall be determined by the Representatives, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time.  If the option is exercised as to all or any portion of the Option Securities, each of the Underwriters, acting severally and not jointly, will purchase that proportion of the total number of Option Securities then being purchased which the number of Initial Securities set forth in Schedule A opposite the name of such Underwriter bears to the total number of Initial Securities, subject, in each case, to such adjustments as the Representatives in their sole discretion shall make to eliminate any sales or purchases of fractional shares.

 

(c)           Payment .  Payment of the purchase price for, and delivery of certificates for, the Initial Securities shall be made at the offices of DLA Piper LLP (US), 1251 Avenue of the Americas, 27th Floor, New York, New York 10020, or at such other place as shall be agreed upon by the Representatives and the Company, at 9:00 a.m. (New York time) on the second (third, if the pricing occurs after 4:30 p.m. (New York time) on any given day) business day after the date hereof (unless postponed in accordance with the provisions of Section 10), or such other time not later than ten business days after such date as shall be agreed upon by the Representatives and the Company (such time and date of payment and delivery being herein called “ Closing Time ”).  In addition, in the event that any or all of the Option Securities are purchased by the Underwriters, payment of the purchase price for, and delivery of certificates for, such Option Securities shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Representatives and the Company, on each Date of Delivery as specified in the notice from the Representatives to the Company.  Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company against delivery to the Representatives for the respective accounts of the Underwriters of certificates for the Securities to be purchased by them.  It is understood that each Underwriter has authorized the Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Initial Securities and the Option Securities, if any, which it has agreed to purchase.  The Representatives, individually and not as representatives of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Initial Securities or the Option Securities, if any, to be purchased by any Underwriter whose funds have not been received by the Closing Time or the relevant Date of Delivery, as the case may be, but such payment shall not relieve such Underwriter from its obligations hereunder.

 

SECTION 3.                             Covenants of the Company and the Operating Partnership .  The Company and the Operating Partnership, jointly and severally, covenant with each Underwriter as follows:

 

(a)                                  Compliance with Securities Regulations and Commission Requests .  The Company, subject to Section 3(b), will comply with the requirements of Rule 430B, and will notify the Representatives immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective or any amendment or supplement to the Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus including any document incorporated by reference therein or for additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of any preliminary prospectus or the Prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement and (v) if the Company becomes the subject of a proceeding under Section 8A of the 1933 Act in connection with the offering of the Securities.  The Company will effect all filings required under Rule 424(b), in the manner and within the time period required by Rule 424(b) (without reliance on Rule

 

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424(b)(8)), and will take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus.  The Company will make every reasonable effort to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment.

 

(b)          Continued Compliance with Securities Laws .

 

(i)                                      The Company will comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Registration Statement, the General Disclosure Package and the Prospectus.  The Company will advise the Underwriters promptly of the happening of any event known to the Company or the Operating Partnership within the time during which a Prospectus relating to the Securities is (or, but for the exception afforded by Rule 172 of the 1933 Act Regulations, would be) required to be delivered under the 1933 Act or the 1933 Act Regulations that, in the judgment of the Company or in the reasonable opinion of the Representatives or counsel for the Underwriters, would require the Company to (i) amend the Registration Statement in order that the Registration Statement will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) amend or supplement the General Disclosure Package or the Prospectus in order that the General Disclosure Package or the Prospectus, as the case may be, will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) amend the Registration Statement or amend or supplement the General Disclosure Package or the Prospectus, as the case may be, to comply with the 1933 Act and the 1933 Act Regulations and, during such time, to promptly prepare and furnish to the Underwriters copies of the proposed amendment or supplement before filing any such amendment or supplement with the Commission, and thereafter promptly furnish at the Company’s own expense to the Underwriters and to dealers, copies in such quantities and at such locations as the Representatives may from time to time reasonably request of such amendment or supplement; if at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement (or any other registration statement relating to the Securities) or the General Disclosure Package or any preliminary prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, to promptly notify the Representatives and promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

 

(ii)                                   The Company will file promptly with the Commission any amendment to the Registration Statement or any amendment or supplement to the General Disclosure Package or the Prospectus, as the case may be, that may, in the judgment of the Company or the Representatives, be required by the 1933 Act or requested by the Commission.

 

(iii)                                Prior to filing with the Commission any amendment to the Registration Statement, any amendment or supplement to the General Disclosure Package or the Prospectus or any Prospectus pursuant to Rule 424 under the 1933 Act, the Company will furnish for review a copy thereof to the Representatives and counsel for the Underwriters and not to file any such proposed amendment or supplement to which the Representatives reasonably object; the

 

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Company will give the Representatives notice of its intention to make any filing pursuant to the 1934 Act or the 1934 Act Regulations from the Applicable Time to the Closing Time and to furnish the Representatives and counsel for the Underwriters with copies of any such documents a reasonable amount of time prior to such proposed filing and not to file or use any such document to which the Representatives or counsel for the Underwriters shall reasonably object.

 

(c)                                   Delivery of Registration Statements .  The Company has furnished or will deliver to the Representatives and counsel for the Underwriters, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and signed copies of all consents and certificates of experts, and will also deliver to the Representatives, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) for each of the Underwriters.  The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

(d)                                  Delivery of Prospectuses .  The Company has delivered to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act.  The Company will furnish to each Underwriter, without charge, during the period when a prospectus relating to the Securities is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the 1933 Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request.  The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

(e)                                   Blue Sky Qualifications .  The Company will use its best efforts, in cooperation with the Underwriters, to qualify the Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representatives may designate and to maintain such qualifications in effect so long as required to complete the distribution of the Securities; provided, however, that the Company and the Operating Partnership shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

 

(f)                                    Rule 158 .  The Company will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide to the Underwriters the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.

 

(g)                                   Use of Proceeds .  The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Registration Statement, the General Disclosure Package and the Prospectus under “Use of Proceeds.”

 

(h)                                  Listing .  The Company will use its best efforts to effect and maintain the listing of the Securities and the Conversion Shares on the NYSE by the Closing Time or Date of Delivery, as applicable.

 

(i)                                      Restriction on Sale of Securities .  During a period of 45 days from the date of the Prospectus, the Company, the Operating Partnership and the Advisor will not, without the prior written

 

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consent of the Representatives, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, lend or otherwise dispose of or transfer any shares of Series B Preferred Stock, or any securities similar to or ranking on par with or senior to the Series B Preferred Stock or any securities convertible into or exchangeable or exercisable for Series B Preferred Stock or similar, parity or senior securities, including without limitation Series B Preferred Units, or file any registration statement under the 1933 Act with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Series B Preferred Stock or such similar, parity or senior securities, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Series B Preferred Stock or similar, parity or senior securities or such other securities, in cash or otherwise.  The foregoing sentence shall not apply to the Securities to be sold hereunder.

 

(j)                                     Reporting Requirements .  The Company, during the period when a Prospectus relating to the Securities is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the 1933 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and 1934 Act Regulations.

 

(k)                                  Issuer Free Writing Prospectuses .  The Company agrees that, unless it obtains the prior written consent of the Representatives, it will not make any offer relating to the Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus,” or a portion thereof, required to be filed by the Company with the Commission or retained by the Company under Rule 433; provided that the Representatives will be deemed to have consented to the Issuer Free Writing Prospectuses listed on Schedule C hereto and any “road show that is a written communication” within the meaning of Rule 433(d)(8)(i) that has been reviewed by the Representatives.  The Company represents that it has treated or agrees that it will treat each such free writing prospectus consented to, or deemed consented to, by the Representatives as an “issuer free writing prospectus,” as defined in Rule 433, and that it has complied and will comply with the applicable requirements of Rule 433 with respect thereto, including timely filing with the Commission where required, legending and record keeping.  If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement, any preliminary prospectus or the Prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Representatives and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

 

(l)                                      Absence of Manipulation .  Except as contemplated herein or in the General Disclosure Package and the Prospectus, each of the Company, the Operating Partnership and the Advisor will not take, directly or indirectly, any action which is designed, or would be reasonably expected, to cause or result in, or which constitutes, the stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Securities.

 

(m)                              Qualification and Taxation as a REIT .  The Company will use its best efforts to meet the requirements for qualification and taxation as a REIT under the Code for its taxable year ending December 31, 2017, and the Company will use its best efforts to continue to qualify for taxation as a REIT under the Code in subsequent taxable years and will not take any action to revoke or otherwise terminate the Company’s REIT election, unless the Company’s board of directors determines in good faith that it is no longer in the best interests of the Company and its stockholders to be so qualified.

 

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(n)                                  Sarbanes-Oxley Act . The Company will comply in all material respects with all applicable provisions of the Sarbanes-Oxley Act that are in effect and applicable to the Company.

 

(o)                                  Notification of Material Events .  The Company, during the period when the Prospectus is (or but for the exemption in Rule 172 would be) required to be delivered under the 1933 Act or the 1934 Act, shall notify the Representatives of the occurrence of any material events respecting its (including those of the Operating Partnership) activities, affairs or condition, financial or otherwise, if, but only if, as a result of any such event it is necessary, in the opinion of counsel, to amend or supplement the Prospectus in order to make the Prospectus not misleading in the light of the circumstances existing at the time it is (or but for the exemption in Rule 172 would be) delivered to a purchaser, and the Company will forthwith supply such information as shall be necessary in the opinion of counsel to the Company and the Underwriters for the Company to prepare any necessary amendment or supplement to the Prospectus so that, as so amended or supplemented, the Prospectus will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is (or but for the exemption in Rule 172 would be) delivered to a purchaser, not misleading.

 

(p)                                  Emerging Growth Company Status . The Company will promptly notify the Representatives if the Company ceases to be an Emerging Growth Company at any time prior to the later of (i) completion of the distribution of the Securities within the meaning of the 1933 Act and (ii) completion of the 90-day restricted period referred to in Section 3(i).

 

(q)                                  Articles Supplementary . The Company will duly authorize, execute, deliver and file with the SDAT the Articles Supplementary prior to the Closing Time.

 

(r)                                     Operating Partnership Agreement Amendment . The Company will duly authorize, execute and deliver the Operating Partnership Agreement Amendment prior to the Closing Time.

 

(s)                                    Reservation of Conversion Shares.  The Company will reserve and keep available at all times the maximum number of Conversion Shares issuable upon conversion of the Securities until such time as such Conversion Shares have been issued or the Securities have been redeemed.

 

SECTION 4.                             Payment of Expenses .

 

(a)          Expenses .  The Company agrees to pay all costs and expenses incident to the performance of its obligations under this Agreement, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, including expenses, fees and taxes in connection with: (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters and to dealers of copies of each preliminary prospectus, each Issuer Free Writing Prospectus and the Prospectus and any amendments or supplements thereto (including the costs of mailing and shipment), (iii) the preparation, issuance and delivery of the certificates for the Securities to the Underwriters, including any stock or other transfer taxes or duties payable upon the sale of the Securities to the Underwriters, (iv) the printing of this Agreement and any dealer agreements and furnishing of copies of each to the Underwriters and to dealers (including costs of mailing and shipment), (v) the fees and disbursements of the Company’s counsel, accountants and other advisors, (vi) the qualification of the Securities for offering and sale under state laws that the Company and the Representatives have mutually agreed are appropriate and the determination of their eligibility for investment under state law as aforesaid, and the printing and furnishing of copies of any blue sky surveys or legal investment surveys to the Underwriters and to dealers, (vii) the fees and expenses of any transfer agent or registrar for the Securities and miscellaneous expenses referred to in the Registration Statement, (viii) the costs and

 

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expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the Securities, (ix) the filing fees incident to the review by FINRA of the terms of the sale of the Securities,  (x) the fees and expenses incurred in connection with the listing of the Securities and the Conversion Shares on the NYSE, and (xi) the performance of the Company’s and the Operating Partnership’s other obligations hereunder. Upon request of the Representatives, the Company will provide funds in advance for filing fees.

 

(b)                                  Termination of Agreement .  If this Agreement is terminated by the Representatives in accordance with the provisions of Section 5 or Section 9(a)(i) or (iii) hereof, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters.

 

SECTION 5.                             Conditions of Underwriters’ Obligations .  The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Company, the Operating Partnership and the Advisor contained herein or in certificates of any officer of the Company, the Operating Partnership or the Advisor or any of their subsidiaries delivered pursuant to the provisions hereof, to the performance by the Company, the Operating Partnership and the Advisor of their respective covenants and other obligations hereunder, and to the following further conditions:

 

(a)                                  Effectiveness of Registration Statement .  The Registration Statement has become effective and at the Closing Time no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the 1933 Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company’s knowledge, contemplated; and the Company has complied with each request (if any) from the Commission for additional information.

 

(b)                                  Opinion of Counsel for Company, the Operating Partnership and the Advisor .  At the Closing Time, the Representatives shall have received the favorable opinion and negative assurance statement, dated the Closing Time, of Andrews Kurth Kenyon LLP, counsel for the Company, the Operating Partnership and the Advisor, together with signed or reproduced copies of such letter for each of the other Underwriters, substantially in the form attached as Exhibit A hereto.

 

(c)                                   Opinion of Tax Counsel for Company and the Operating Partnership .  At the Closing Time, the Representatives shall have received the favorable opinion, dated the Closing Time, of Andrews Kurth Kenyon LLP, tax counsel for the Company and the Operating Partnership, together with signed or reproduced copies of such letter for each of the other Underwriters, substantially in the form attached as Exhibit B hereto.

 

(d)                                  Opinion of In-House Counsel for the Company, the Operating Partnership and the Advisor.  At the Closing Time, the Representatives shall have received the favorable opinion, dated the Closing Time, of in-house counsel for the Company, the Operating Partnership and the Advisor, together with signed or reproduced copies of such letter for each of the other Underwriters, substantially in the form attached as Exhibit C hereto.

 

(e)                                   Opinion of Maryland Counsel for Company and the Operating Partnership.  At the Closing Time, the Representatives shall have received the favorable opinion, dated the Closing Time, of Hogan Lovells US LLP, Maryland counsel for the Company and the Operating Partnership, together with signed or reproduced copies of such letter for each of the other Underwriters, substantially in the form attached as Exhibit D hereto.

 

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(f)                                    Opinion of Counsel for Underwriters .  At the Closing Time, the Representatives shall have received the favorable opinion, dated the Closing Time, of DLA Piper LLP (US), counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters, with respect to such matters as the Underwriters may reasonably request.

 

(g)                                   Officers’ Certificates .  At the Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the General Disclosure Package or the Prospectus, any Material Adverse Effect, and the Representatives shall have received a certificate of each of the Chief Executive Officer, President or Chief Operating Officer and the Chief Financial Officer of the Company, dated the Closing Time, to the effect that (i) there has been no such Material Adverse Effect, (ii) the representations and warranties in Section 1(a) of this Agreement are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) each of the Company and the Operating Partnership has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement under the 1933 Act has been issued, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to their knowledge, contemplated. At the Closing Time, the Representatives shall have received a certificate of each of the Chief Executive Officer, President or Chief Operating Officer and the Chief Financial Officer of the Advisor, dated the Closing Time, to the effect that (i) there has not been a Material Adverse Effect, (ii) the representations and warranties in Section 1(b) of this Agreement are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Advisor has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement under the 1933 Act has been issued, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the knowledge of the Advisor, contemplated.

 

(h)                                  Ernst & Young LLP Comfort Letter .  At the time of the execution of this Agreement, the Representatives shall have received from Ernst & Young LLP a letter, dated such date, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters, relating to the combined consolidated financial statements, including pro forma financial statements (if any), of the Company and its subsidiaries, and containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(i)                                      Bring-down Ernst & Young LLP Comfort Letter .  At the Closing Time, the Representatives shall have received from Ernst & Young LLP a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (h) of this Section, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time.

 

(j)                                     BDO USA, LLP Comfort Letter .  At the time of the execution of this Agreement, the Representatives shall have received from BDO USA, LLP a letter, dated such date, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters, relating to the combined consolidated financial statements, including pro forma financial statements (if any), of the Company and its subsidiaries, and containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the General Disclosure Package and the Prospectus.

 

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(k)                                  Bring-down BDO USA, LLP Comfort Letter .  At the Closing Time, the Representatives shall have received from BDO USA, LLP a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (j) of this Section, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time.

 

(l)                                      Peterson Sullivan LLP Comfort Letter . At the time of the execution of this Agreement, the Representatives shall have received from Peterson Sullivan LLP a letter, dated such date, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters, relating to the financial statements of Yountville Investors, LLC for the acquisition of the Bardessono Inn & Spa in Yountville, California, and containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(m)                              Chief Financial Officer’s Certificate .  At the time of execution of this Agreement, the Representatives shall have received a certificate of the Chief Financial Officer of the Company, dated as of such date, in a form reasonably satisfactory to the Representatives, together with signed or reproduced copies of such certificate for each of the other Underwriters. At the Closing Time, the Representatives shall have received a certificate, dated as of the Closing Time, of the Chief Financial Officer of the Company confirming that the certificate delivered by the Company at the time of execution of this Agreement pursuant to the prior sentence of this Section 5(m) hereof remains true and correct as of the Date of Delivery.

 

(n)                                  Articles Supplementary .  At the Closing Time, the Articles Supplementary shall have been accepted for record by the SDAT and shall be effective under Maryland law.

 

(o)                                  Operating Partnership Agreement Amendment.   At the Closing Time, the Representatives shall have received a copy of the Operating Partnership Agreement Amendment duly authorized, executed and delivered by the Company.

 

(p)                                  Approval of Listing .  At the Closing Time, the Securities and the Conversion Shares shall have been approved for listing on the NYSE, subject only to official notice of issuance.

 

(q)                                  No Objection .  FINRA shall not have raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements relating to the offering of the Securities.

 

(r)                                     No Amendments or Supplements .  No amendment or supplement to the Registration Statement, the Prospectus, any preliminary prospectus or any Issuer Free Writing Prospectus shall be filed to which the Underwriters shall have reasonably objected in writing.

 

(s)                                    No Downgrade .  Subsequent to the execution and delivery of this Agreement and prior to the Closing Time, there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the securities of the Company, the Operating Partnership or any of their subsidiaries by any “nationally recognized statistical rating organization,” as such term is defined for purposes of Section 3(a)(62) of the 1934 Act.

 

(t)                                     Conditions to Purchase of Option Securities .  In the event that the Underwriters exercise their option provided in Section 2(b) hereof to purchase all or any portion of the Option Securities, the representations and warranties of the Company, the Operating Partnership and the Advisor contained herein and the statements in any certificates furnished by the Company and the Advisor and any of their

 

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subsidiaries hereunder shall be true and correct as of each Date of Delivery and, at the relevant Date of Delivery, the Representatives shall have received:

 

(i)                                      Officers’ Certificates .  A certificate, dated such Date of Delivery, of each of the Chief Executive Officer, President or Chief Operating Officer and the Chief Financial Officer of the Company, confirming that the certificate delivered at the Closing Time pursuant to Section 5(g) hereof remains true and correct as of such Date of Delivery. A certificate, dated such Date of Delivery, of each of the Chief Executive Officer, President or Chief Operating Officer and the Chief Financial Officer of the Advisor, confirming that the certificate delivered at the Closing Time pursuant to Section 5(g) hereof remains true and correct as of such Date of Delivery.

 

(ii)                                   Opinion of Counsel for Company, the Operating Partnership and the Advisor .  The favorable opinion and negative assurance statement of Andrews Kurth Kenyon LLP, counsel for the Company, the Operating Partnership and the Advisor, in form and substance reasonably satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(b) hereof.

 

(iii)                                Opinion of Tax Counsel for Company and the Operating Partnership .  The favorable opinion of Andrews Kurth Kenyon LLP, tax counsel for the Company and the Operating Partnership, in form and substance satisfactory reasonably to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(c) hereof.

 

(iv)                               Opinion of In-House Counsel for the Company, the Operating Partnership and the Advisor . The favorable opinion of in-house counsel for the Company, the Operating Partnership and the Advisor, in form and substance reasonably satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(d) hereof.

 

(vi)                               Opinion of Maryland Counsel for Company and the Operating Partnership . The favorable opinion of Hogan Lovells US LLP, Maryland counsel for the Company and the Operating Partnership, in form and substance reasonably satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(e) hereof.

 

(vii)                            Opinion of Counsel for Underwriters .  The favorable opinion of DLA Piper LLP (US), counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(f) hereof.

 

(viii)                         Bring-down Ernst & Young LLP Comfort Letter .  A letter from Ernst & Young LLP, in form and substance satisfactory to the Representatives and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representatives pursuant to Section 5(i) hereof, except that the “specified date” in the letter furnished pursuant to this paragraph shall be a date not more than three business days prior to such Date of Delivery.

 

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(ix)                               Bring-down BDO USA, LLP Comfort Letter .  A letter from BDO USA, LLP, in form and substance satisfactory to the Representatives and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representatives pursuant to Section 5(k) hereof, except that the “specified date” in the letter furnished pursuant to this paragraph shall be a date not more than three business days prior to such Date of Delivery.

 

(x)                                  Chief Financial Officer’s Certificate .  A certificate of the Chief Financial Officer of the Company, dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representatives pursuant to Section 5(m) hereof.

 

(u)                                  Additional Documents .  At the Closing Time and at each Date of Delivery (if any) counsel for the Underwriters shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Securities as herein contemplated shall be reasonably satisfactory in form and substance to the Representatives and counsel for the Underwriters.

 

(v)          Termination of Agreement .  If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any condition to the purchase of Option Securities on a Date of Delivery which is after the Closing Time, the obligations of the several Underwriters to purchase the relevant Option Securities, may be terminated by the Representatives by notice to the Company at any time at or prior to Closing Time or such Date of Delivery, as the case may be, and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 6, 7, 8, 11, 12, 14, 15, 16, 17 and 18 shall survive any such termination and remain in full force and effect.

 

SECTION 6.                             Indemnification .

 

(a)                                  Indemnification of Underwriters .  The Company, the Operating Partnership and the Advisor agree, jointly and severally, to indemnify and hold harmless each Underwriter, its affiliates (as such term is defined in Rule 501(b) under the 1933 Act (each, an “ Affiliate ”)), its selling agents and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

 

(i)                                      against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including any information deemed to be a part thereof pursuant to Rule 430B, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in (A) any preliminary prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package or the Prospectus (or any amendment or supplement thereto), or (B) in any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the offering of the Securities (“ Marketing Materials ”), including any road show or investor presentation made to investors by the Company (whether in person or electronically),  or the omission or alleged omission in any preliminary prospectus, Issuer Free Writing Prospectus, the General Disclosure Package, the Prospectus or in Marketing Materials of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

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(ii)                                   against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Company;

 

(iii)                                against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Representatives), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above;

 

provided , however , that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in the Registration Statement (or any amendment thereto), including any information deemed to be a part thereof pursuant to Rule 430B, or any preliminary prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with the Underwriter Information.

 

(b)                                  Indemnification of Company, the Advisor and Directors and Officers .  Each Underwriter severally agrees to indemnify and hold harmless the Company, the Operating Partnership and the Advisor, each of their respective directors, each of the Company’s officers who signed the Registration Statement, and each person, if any, who controls the Company or the Advisor within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including any information deemed to be a part thereof pursuant to Rule 430B, or any preliminary prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with the Underwriter Information.

 

(c)                                   Actions against Parties; Notification .  Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced (by the forfeiture of substantial rights and defenses) as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement.  In the case of parties indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by the Representatives, and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Company.  An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party.  In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances.  No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution

 

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could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

(d)                                  Settlement without Consent if Failure to Reimburse .  If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

 

SECTION 7.                             Contribution .  If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, the Operating Partnership and the Advisor, on the one hand, and the Underwriters, on the other hand, from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, the Operating Partnership and the Advisor, on the one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions, which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

 

The relative benefits received by the Company, the Operating Partnership and the Advisor, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company, the Operating Partnership and the Advisor, on the one hand, and the total underwriting discount received by the Underwriters, on the other hand, in each case as set forth on the cover of the Prospectus, bear to the aggregate public offering price of the Securities as set forth on the cover of the Prospectus.

 

The relative fault of the Company, the Operating Partnership and the Advisor, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, the Operating Partnership or the Advisor or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

The Company, the Operating Partnership, the Advisor and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7.  The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any

 

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litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

 

Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission.

 

No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Underwriter’s Affiliates and selling agents shall have the same rights to contribution as such Underwriter, and each director of the Company and the Advisor, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company, the Operating Partnership or the Advisor within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company, the Operating Partnership or the Advisor.  The Underwriters’ respective obligations to contribute pursuant to this Section 7 are several in proportion to the number of Initial Securities set forth opposite their respective names in Schedule A hereto and not joint. The Company’s, the Operating Partnership’s and the Advisor’s respective obligations to contribute pursuant to this Section 7 are joint and several.

 

The provisions of this Section shall not affect any agreement among the Company and the Operating Partnership with respect to contribution.

 

SECTION 8.                             Representations, Warranties and Agreements to Survive .  All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or the Advisor or any of their subsidiaries or the Operating Partnership submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its officers or directors, or the Company, the Advisor, any person controlling the Company, the Operating Partnership or the Advisor, or their officers and directors and (ii) delivery of and payment for the Securities.

 

SECTION 9.                             Termination of Agreement .

 

(a)                                  Termination .  The Representatives may terminate this Agreement, by notice to the Company, at any time at or prior to the Closing Time (i) if there has been, in the judgment of the Representatives, since the time of execution of this Agreement or since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package or the Prospectus, any Material Adverse Effect, or (ii) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representatives, impracticable or inadvisable to proceed with the completion of the offering or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended or materially limited by the Commission or the NYSE, or (iv) if trading generally on the NYSE MKT or the NYSE or in the Nasdaq Global Market has been

 

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suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by order of the Commission, FINRA or any other governmental authority, or (v) a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States or with respect to Clearstream or Euroclear systems in Europe, or (vi) if a banking moratorium has been declared by either Federal or New York authorities.

 

(b)                                  Liabilities .  If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6, 7, 8, 11, 12, 14, 15, 16, 17 and 18 shall survive such termination and remain in full force and effect.

 

SECTION 10.                      Default by One or More of the Underwriters .  If one or more of the Underwriters shall fail at the Closing Time or a Date of Delivery to purchase the Securities which it or they are obligated to purchase under this Agreement (the “ Defaulted Securities ”), the Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representatives shall not have completed such arrangements within such 24-hour period, then:

 

(i)                                      if the number of Defaulted Securities does not exceed 10% of the number of Securities to be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or

 

(ii)                                   if the number of Defaulted Securities exceeds 10% of the number of Securities to be purchased on such date, the Representatives may terminate this Agreement or, with respect to any Date of Delivery which occurs after the Closing Time, the obligation of the Underwriters to purchase, and the Company to sell, the Option Securities to be purchased and sold on such Date of Delivery, without liability on the part of any non-defaulting Underwriter.

 

No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default.

 

In the event of any such default which does not result in a termination of this Agreement or, in the case of a Date of Delivery which is after the Closing Time, which does not result in a termination of the obligation of the Underwriters to purchase and the Company to sell the relevant Option Securities, as the case may be, either the (i) Representatives or (ii) the Company shall have the right to postpone Closing Time or the relevant Date of Delivery, as the case may be, for a period not exceeding seven days in order to effect any required changes in the Registration Statement, the General Disclosure Package or the Prospectus or in any other documents or arrangements.  As used herein, the term “Underwriter” includes any person substituted for an Underwriter under this Section 10.

 

SECTION 11.                      Notices .  All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication.  Notices to the Underwriters shall be directed to the Representatives at UBS Securities LLC, Prospectus Department, 1285 Avenue of the Americas, New York, New York 10019 (facsimile (203) 719-0495) and Morgan Stanley & Co. LLC at 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department; and, with a copy to (which shall not constitute notice) DLA Piper LLP (US), 1251 Avenue of the Americas, 27th Floor, New

 

37

 

York, New York 10020, attention of Kerry E. Johnson (facsimile (212) 335-4501); notices to the Company, the Operating Partnership and the Advisor shall be directed to them at Ashford Hospitality Prime, Inc., 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254, attention of David Brooks (facsimile (972) 490-9605), with a copy to (which shall not constitute notice) Andrews Kurth Kenyon LLP, 600 Travis, Suite 4200, Houston, Texas 77002, attention of George Vlahakos (facsimile (713) 220-4285).

 

SECTION 12.                      No Advisory or Fiduciary Relationship .  The Company, its subsidiaries and the Advisor acknowledge and agree that (a) the purchase and sale of the Securities pursuant to this Agreement, including the determination of the public offering price of the Securities and any related discounts and commissions, is an arm’s-length commercial transaction between the Company, its subsidiaries and the Advisor, on the one hand, and the several Underwriters, on the other hand, (b) in connection with the offering of the Securities and the process leading thereto, each Underwriter is and has been acting solely as a principal and is not the agent or fiduciary of the Company, any of its subsidiaries, the Advisor or their respective stockholders, equity interest holders, creditors, employees or any other party, (c) no Underwriter has assumed or will assume an advisory or fiduciary responsibility in favor of the Company, any of its subsidiaries or the Advisor with respect to the offering of the Securities or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company, any of its subsidiaries or the Advisor on other matters) and no Underwriter has any obligation to the Company, any of its subsidiaries or the Advisor with respect to the offering of the Securities except the obligations expressly set forth in this Agreement, (d) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of each of the Company, its subsidiaries and the Advisor, and (e) none of the Underwriters or legal counsel for the Underwriters has provided any legal, accounting, regulatory or tax advice to the Company, any of its subsidiaries or the Advisor with respect to the offering of the Securities and the Company, its subsidiaries and the Advisor have consulted their own respective legal, accounting, regulatory and tax advisors to the extent they deemed appropriate.

 

SECTION 13.                      Parties .  This Agreement shall each inure to the benefit of and be binding upon the Underwriters, the Company, the Operating Partnership and the Advisor and their respective successors.  Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters, the Company, the Operating Partnership and the Advisor and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained.  This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters, the Company, the Operating Partnership and the Advisor and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation.  No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase.

 

SECTION 14.                      Trial by Jury .  The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates), the Operating Partnership, the Advisor and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

SECTION 15.                      GOVERNING LAW .  THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK.

 

38

 

SECTION 16.                      TIME . TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

 

SECTION 17.                      Counterparts .  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.

 

SECTION 18.                      Effect of Headings .  The Section headings herein are for convenience only and shall not affect the construction hereof.

 

[ Signature Page Follows .]

 

39

 

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the Underwriters, the Company, the Operating Partnership and the Advisor in accordance with its terms.

 

		Very truly yours,
		ASHFORD HOSPITALITY PRIME, INC.
		By:	/s/ David A. Brooks
			David A. Brooks, Chief Operating Officer
		ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP
		By:	Ashford Prime OP General Partner LLC,
			as the sole general partner
		By:	Ashford Hospitality Prime, Inc.,
			as the sole managing member
		By:	/s/ David A. Brooks
			David A. Brooks, Chief Operating Officer
		ASHFORD HOSPITALITY ADVISORS LLC
		By:	/s/ David A. Brooks
			David A. Brooks, Chief Operating Officer

 

[Signature Page to Underwriting Agreement (March 2017)]

 

 

CONFIRMED AND ACCEPTED,
	as of the date first above written:
UBS SECURITIES LLC
By:	/s/ Asad Kazim
Name:	Asad Kazim
Title:	Managing Director
By:	/s/ Whitney Mikell
Name:	Whitney Mikell
Title:	Associate Director
MORGAN STANLEY & CO. LLC
By:	/s/ Jon Sierant
Name:	Jon Sierant
Title:	Executive Director

 

For themselves and as Representatives of the other Underwriters named in Schedule A hereto.

 

[Signature Page to Underwriting Agreement (March 2017)]

 

 

SCHEDULE A

 

Name of Underwriter		Number of Initial Securities
UBS Securities LLC		666,171
Morgan Stanley & Co. LLC		678,711
FBR Capital Markets & Co.		429,485
William Blair & Company, L.L.C		57,212
Robert W. Baird & Co. Incorporated		50,942
Janney Montgomery Scott LLC		50,942
JMP Securities LLC		41,537
Total		1,975,000

 

Sch A- 1

 

SCHEDULE B

 

Pricing Term Sheet

 

Ashford Hospitality Prime, Inc.
5.50% Series B Cumulative Convertible Preferred Stock
(Liquidation Preference $25.00 per share)

 

Pricing Term Sheet
March 2, 2017

 

Issuer:		Ashford Hospitality Prime, Inc.
Security:		5.50% Series B Cumulative Convertible Preferred Stock (the “Series B Preferred Stock”)
Size:		1,975,000 shares (2,271,250 shares if the underwriters’ option to purchase additional shares is fully exercised)
Shares outstanding after this offering:		4,865,850 shares (5,162,100 shares if the underwriters’ option to purchase additional shares is fully exercised)
Maturity date:		Perpetual (unless redeemed by the Issuer)
Trade date:		March 3, 2017
Expected settlement date:		March 7, 2017 (T+2)
Liquidation preference:		$25.00 per share, plus accrued and unpaid dividends
Dividend:		5.50% of the $25.00 liquidation price (or $1.375 per share) per annum (dividends on the shares issued in this offering will accrue and be cumulative from January 15, 2017, when, as and if declared by the Issuer’s board of directors out of legally available funds for such purpose)
Dividend payment dates:		January 15, April 15, July 15 and October 15, beginning April 15, 2017
Dividend penalty rate:		+2.0% per annum if dividends are unpaid for six or more quarterly dividend periods. Effective until all accumulated and accrued dividends have been paid in full.
Public offering price:		$20.19 per share; $39,875,250 total (not including the underwriters’ option to purchase additional shares) (including accrued and unpaid dividends from January 15, 2017)
Accrued dividends:		$0.19 per share
Yield (including accrued dividend):		6.809%

 

Sch B- 1

 

Yield (excluding accrued dividend):		6.875%
Underwriting discount:		$0.635985 per share; $1,256,070 total (not including the underwriters’ option to purchase additional shares)
Optional redemption:		On or after June 11, 2020, the Issuer may redeem the Series B Preferred Stock, in whole or in part, for a cash redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends.
		On or prior to the occurrence of a Change of Control, the Issuer may redeem the shares for $25.00 per share in cash plus a Make-Whole Premium (as defined below). See the preliminary prospectus supplement dated March 1, 2017 (the “Preliminary Prospectus Supplement”) for details.
General conversion right:		Each share of Series B Preferred Stock will be convertible at any time at the option of the holder into that number of shares of the Issuer’s common stock at an initial conversion price equal to $18.90 (which represents an initial conversion rate of 1.3228 shares of common stock), as may be subject to adjustment.
Mandatory conversion feature:		At any time, if the Issuer’s common stock equals or exceeds 110% of the applicable conversion price for 45 consecutive trading days, the Issuer has the option to mandatorily convert all or part of the Series B Preferred Stock into common stock of the Issuer at the then applicable conversion ratio. In the event of a mandatory conversion, holders will be entitled to a make-whole payment.
Change of control conversion rights:		On or prior to the occurrence of a Change of Control, each holder of Series B Preferred Stock will have the right to convert some or all of its shares into a number of shares of the Issuer’s common stock per share equal to the lesser of:
		(1)          the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any accumulated, accrued and unpaid dividends to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a record date and prior to the corresponding dividend payment date, in which case no additional amount for such accumulated, accrued and unpaid dividends will be included in this sum) by (ii) the Common Stock Price; and
		(2)          3.2216 share cap, as may be subject to adjustment.
		See the Preliminary Prospectus Supplement for details.

 

Sch B- 2

 

Change of control make-whole premium:		In the event a Change of Control occurs prior to June 11, 2019 and either:
		(1)          the Issuer exercises its Special Optional Redemption Right; or
		(2)          the holder elects to convert its shares by exercising the Change of Control Conversion Right,
		then the Issuer will pay such holder, in cash, a make-whole premium equal to the present value, computed using a discount rate of 5.50% per annum compounded quarterly, of all dividend payments on such shares of Series B Preferred Stock for all remaining dividend periods (excluding any accumulated dividend amount) from the date of such exercise up to, but excluding, June 11, 2019. See the Preliminary Prospectus Supplement for details.
Use of proceeds:		The Issuer expects to receive net proceeds from this offering of approximately $38.3 million (approximately $44.1 million if the underwriters exercise their option to purchase additional shares of Series B Preferred Stock in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by the Issuer, from the sale of Series B Preferred Stock hereby. The Issuer expects to use the net proceeds from this offering, together with the net proceeds received from any exercise by the underwriters of their option to purchase additional shares of Series B Preferred Stock and the net proceeds from its concurrent public offering of common stock, for general corporate purposes, including to fund future acquisitions, which may include the Issuer’s recently announced potential acquisitions, if such acquisitions are consummated.
Joint book-running managers:		UBS Securities LLC Morgan Stanley & Co. LLC FBR Capital Markets & Co.
Co-managers:		Robert W. Baird & Co. Incorporated Janney Montgomery Scott LLC JMP Securities LLC William Blair & Company, L.L.C.
Listing:		NYSE: AHP PR B
CUSIP/ISIN:		044102 507 / US0441025071

 

This communication is intended for the sole use of the person to whom it is provided by us.  This communication does not constitute an offer to sell the Series B Preferred Stock and is not soliciting an offer to buy the Series B Preferred Stock in any jurisdiction where the offer or sale is not permitted.

 

Sch B- 3

 

The Issuer has filed a registration statement (including the preliminary prospectus supplement) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and the preliminary prospectus supplement and other documents the Issuer has filed with the SEC for more complete information about the Issuer and this offering.

 

You may get these documents for free by visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, the Issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by contacting: UBS Securities LLC toll-free at 1-888-827-7275; or Morgan Stanley & Co. LLC toll-free at 1-866-718-1640 or email: prospectus@morganstanley.com.

 

ANY DISCLAIMER OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED, SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

 

Sch B- 4

 

SCHEDULE C

 

Free Writing Prospectuses

 

The Pricing Term Sheet set forth in Schedule B to this Agreement.

 

Sch C- 1

 

SCHEDULE D

 

Significant Subsidiaries

 

AHP SMA GP, LLC

 

AHP SMA, LP

 

Ashford Chicago GP LLC

 

Ashford Chicago Junior Mezz LLC

 

Ashford Chicago LP

 

Ashford Chicago Senior Mezz LLC

 

Ashford HHC III LLC

 

Ashford HHC Partners III LP

 

Ashford Hospitality Prime Limited Partnership

 

Ashford Hospitality Prime, Inc.

 

Ashford Philadelphia Annex GP LLC

 

Ashford Philadelphia Annex LP

 

Ashford Pier House GP LLC

 

Ashford Pier House LP

 

Ashford Pier House Mezz A LLC

 

Ashford Pier House Mezz B LLC

 

Ashford Plano-M LP

 

Ashford Prime OP General Partner LLC

 

Ashford Prime OP Limited Partner LLC

 

Ashford Prime TRS Corporation

 

Ashford San Francisco II LP

 

Ashford Sapphire III GP LLC

 

Ashford Sapphire VII GP LLC

 

Ashford Seattle Downtown LP

 

Sch D- 1

 

Ashford Seattle Waterfront LP

 

Ashford SF GP LLC

 

Ashford Tampa International Hotel, LP

 

Ashford Thomas LLC

 

Ashford TRS Chicago II LLC

 

Ashford TRS Chicago Junior Mezz LLC

 

Ashford TRS Chicago Senior Mezz LLC

 

Ashford TRS Philadelphia Annex LLC

 

Ashford TRS Pier House LLC

 

Ashford TRS Pier House Mezz A LLC

 

Ashford TRS Pier House Mezz B LLC

 

Ashford TRS Sapphire III LLC

 

Ashford TRS Sapphire VII LLC

 

Ashford TRS SF LLC

 

CHH Capital Hotel GP LLC

 

CHH Capital Hotel Partners LP

 

CHH Capital Tenant Corp.

 

CHH III Tenant Parent Corp.

 

CHH Torrey Pines Hotel GP LLC

 

CHH Torrey Pines Hotel Partners LP

 

CHH Torrey Pines Tenant Corp.

 

RC Hotels (Virgin Islands), Inc.

 

Sch D- 2

 

Exhibit A

 

FORM OF OPINION AND NEGATIVE ASSURANCE LETTER OF COUNSEL FOR THE COMPANY AND THE SUBSIDIARIES

 

1.                          The Company owns of record all of the outstanding membership interests in OP GP, free and clear of all liens in respect of which a financing statement under the Uniform Commercial Code of the State of Maryland naming the Company is on file in the office of the Secretary of State of the State of Maryland.  All of such issued and outstanding membership interests of OP GP have been duly authorized and validly issued and are fully paid and non-assessable (except to the extent set forth in Sections 18-607 and 18-804 of the Delaware LLC Act).

 

2.                          The Company owns of record all of the outstanding membership interests in OP LP, free and clear of all liens in respect of which a financing statement under the Uniform Commercial Code of the State of Maryland naming the Company is on file in the office of the Secretary of State of the State of Maryland.  All of the issued and outstanding membership interests of OP LP have been duly authorized and validly issued and are fully paid and non-assessable (except to the extent set forth in Sections 18-607 and 18-804 of the Delaware LLC Act).

 

3.                          OP LP owns [•]% of the limited partner interests in the Operating Partnership (such units, the “ Ashford OP Units ”) free and clear of all liens in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming OP LP is on file in the office of the Secretary of State of the State of Delaware.  The Ashford OP Units and the outstanding Series B Preferred Units have been duly authorized and validly issued and are fully paid and non-assessable (except to the extent set forth in Section 17-303, 17-607 and 17-804 of the DRULPA).

 

4.                          OP GP owns a noneconomic general partner interest in the Operating Partnership free and clear of all liens in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming OP GP is on file in the office of the Secretary of State of the State of Delaware.   Such noneconomic general partner interest has been duly authorized and validly issued.

 

5.                          The Series B Preferred Units underlying the Securities have been duly authorized and, when issued and delivered by the Operating Partnership in accordance with the OP Partnership Agreement against payment therefor of the consideration set forth therein, will be validly issued and non-assessable (except to the extent set forth in Section 17-303, 17-607 and 17-804 of the DRULPA).  The common units representing limited partner interests in the Operating Partnership (the “ Common Units ”) issuable upon conversion of the Series B Preferred Units (the “ Conversion Units ”) have been duly authorized and, when issued and delivered by the Operating Partnership in accordance with the OP Partnership Agreement, will be validly issued and non-assessable (except to the extent set forth in Section 17-303, 17-607 and 17-804 of the DRULPA).  The issuance of the Series B Preferred Units and the Conversion Units are not subject to preemptive rights of any securityholder of the Operating Partnership pursuant to any Applicable Agreement.  The holders of outstanding Series B Preferred Units and Common Units are not entitled pursuant to the DRULPA or the OP Partnership Agreement to preemptive or other rights to subscribe for (i) the Securities, (ii) the Series B Preferred Units, (iii) the shares of common stock of the Company issuable upon conversion of the Securities or (iv) the Conversion Units.

 

6.                          To the best of our knowledge, except (i) as disclosed in the Disclosure Package and the Prospectus, (ii) as set forth in the OP Organizational Documents, the Charter, the OP GP Agreement or the OP LP Agreement or (iii) with respect to the issued and outstanding Common

 

Ex A- 1

 

Units and Series B Preferred Units and long-term incentive partnership units in the Operating Partnership held by partners other than the Company, which are redeemable for cash or, at the option of the Company, into common stock pursuant to the OP Partnership Agreement, there are no outstanding (a) securities or obligations of the Company, the Operating Partnership, OP GP or the OP LP convertible into or exchangeable for any capital stock or partnership interests of the Company or the Operating Partnership, respectively, (b) warrants, rights or options to subscribe for or purchase from the Company, the Operating Partnership, OP GP or OP LP any capital stock or partnership interests, or any securities convertible or exchangeable into capital stock or partnership interests of the Company, the Operating Partnership, OP GP or OP LP, respectively, or (c) obligations of the Company, the Operating Partnership. OP GP or OP LP to issue any shares of capital stock, partnership interests, membership interests or other equity interests, as applicable, or any convertible or exchangeable securities or obligation, or any warrants, rights or options.

 

7.                          Each of OP GP, OP LP, the Operating Partnership and the Advisor is validly existing and of good standing as a limited partnership or limited liability company, as the case may be, under the laws of the State of Delaware, and has full limited partnership or limited liability company power and authority, as applicable, to own its respective properties and to conduct its respective businesses as described in the Disclosure Package and the Prospectus and, with respect to the Operating Partnership and the Advisor, to consummate the transactions described in the Underwriting Agreement.

 

8.                          Each of the Persons listed on Schedule I hereto is in good standing in each jurisdiction set forth opposite its name therein.

 

9.                          None of (i) the execution and delivery by the Company, the Advisor or the Operating Partnership of the Underwriting Agreement, (ii) the consummation by the Company of the issuance and sale of the Securities pursuant to the Underwriting Agreement, (iii) the issuance of the Series B Preferred Units in accordance with the OP Partnership Agreement, (iv) the issuance of the shares of common stock of the Company issuable upon conversion of the Securities and (v) the issuance of the Conversion Units, (A) constituted, constitutes or will constitute a violation of the Advisor of the Advisor Organizational Documents or a violation of the Operating Partnership of the OP Organizational Documents, (B) constituted, constitutes or will constitute a breach or violation of, or a default (or an event which, with notice or lapse of time or both, would constitute such a default), under any of the Advisor Organizational Documents or the OP Organizational Documents, (C) resulted, results or will result in any violation of (1) applicable laws of the State of New York, (2) applicable laws of the United States of America, (3) the DRULPA or (4) the Delaware LLC Act, or (D) resulted, results or will result in the contravention of any Applicable Order.

 

10.                   The execution, delivery and performance of the Advisory Agreement by the Operating Partnership and the Advisor was duly authorized by all necessary limited partnership or limited liability company action of such party, as applicable; and the Advisory Agreement constitutes a valid and binding obligation of the Company, the Operating Partnership and the Advisor, enforceable against the Company, the Operating Partnership and the Advisor in accordance with its terms.

 

11.                   The Underwriting Agreement has been duly authorized, executed and delivered by the Operating Partnership and the Advisor.

 

Ex A- 2

 

12.                   No Governmental Approval or Filing, which has not been obtained or made and is not in full force and effect, is required to authorize, or is required for, (i) the execution and delivery by the Company, the Operating Partnership or the Advisor of the Underwriting Agreement, (ii) the consummation by the Company of the issuance and sale of the Securities pursuant to the Underwriting Agreement, (iii) the issuance of the Series B Preferred Units, (iv) the issuance of the shares of common stock of the Company issuable upon conversion of the Securities or (v) the issuance of the Conversion Units.  As used in this paragraph, “ Governmental Approval or Filing ” means any consent, approval, license, authorization or validation of, or filing, recording or registration with, any executive, legislative, judicial, administrative or regulatory body of the State of Texas, the State of New York, the State of Delaware or the United States of America, pursuant to (i) applicable laws of the State of Texas, (ii) applicable laws of the State of New York (iii) applicable laws of the United States of America, (iv) the DRULPA or (v) the Delaware LLC Act.

 

13.                   The Company is not, and immediately after giving effect to the issuance and sale of the Securities occurring today and the application of proceeds therefrom as described in the Disclosure Package and the Prospectus, will not be, an “ investment company ” within the meaning of said term as used in the Investment Company Act of 1940, as amended.

 

14.                   Except as disclosed in the Registration Statement or the Prospectus, no Person has the right, which has not been waived, under any Applicable Agreement to require the registration under the Securities Act of any sale of securities issued by the Company, by reason of the filing or effectiveness of the Registration Statement.

 

15.                   The statements under the captions “Partnership Agreement” in the Disclosure Package and the Prospectus, insofar as such statements purport to summarize certain provisions of documents and legal matters referred to therein and reviewed by us as described above, fairly summarize such provisions and legal matters in all material respects, subject to the qualifications and assumptions stated therein.

 

In addition, we have participated in conferences with officers and other representatives of the Company, the independent registered public accounting firms for the Company, your counsel and your representatives at which the contents of the Disclosure Package and the Prospectus (including the Incorporated Documents) and related matters were discussed and, although we have not independently verified and are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained or incorporated by reference in the Disclosure Package and the Prospectus (except as and to the extent set forth in paragraph 15 above), on the basis of the foregoing (relying with respect to factual matters to the extent we deem appropriate upon statements by officers and other representatives of the Company), (a) we confirm to you that, in our opinion, each of the Registration Statement, as of its most recent effective date, the Preliminary Prospectus, as of its date, the Pricing Term Sheet, as of its date, and the Prospectus, as of its date, appeared on its face to be appropriately responsive in all material respects to the requirements of the Securities Act and the Rules and Regulations (except that we express no statement or belief as to Regulation S-T), (b) we have not become aware of any documents that are required to be filed as exhibits to the Registration Statement or any of the Incorporated Documents and are not so filed or of any documents that are required to be summarized in the Preliminary Prospectus or the Prospectus or any of the Incorporated Documents, and are not so summarized and (c) furthermore, no facts have come to our attention that have led us to believe that (i) the Registration Statement, at the time it became effective and as of its most recent effective date, insofar as relating to the offering of the Securities, contained an untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Disclosure Package (including the Incorporated Documents), as of 5:45 p.m. on March 2, 2017 (which

 

Ex A- 3

 

you have informed us is a time prior to the time of the first sale of the Securities by any Underwriter), contained an untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) the Prospectus (including the Incorporated Documents), as of its date and as of the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, it being understood that we did not participate in the preparation of each of the Incorporated Documents and that we express no opinion, statement or belief in this letter with respect to (i) the historical financial statements and related schedules, including the notes and schedules thereto and the auditor’s report thereon, (ii) any other financial or accounting data, included or incorporated or deemed incorporated by reference in, or excluded from, the Registration Statement, the Disclosure Package or the Prospectus, and (iii) representations and warranties and other statements of fact included in the exhibits to the Registration Statement or Incorporated Documents.

 

Furthermore, we advise you that according to the effectiveness order of the SEC (regarding the Registration Statement) appearing in the SEC’s Electronic Data Gathering, Analysis, and Retrieval system, the Registration Statement was declared effective under the Securities Act on February 12, 2015.  In addition, based solely on our review of the information made available by the SEC at http://www.sec.gov/litigation/stoporders.shtml, we confirm that the SEC has not issued any stop order suspending the effectiveness of the Registration Statement.  To our knowledge, based solely on our participation in the conferences mentioned above regarding the Registration Statement, no proceedings for that purpose are pending or have been instituted or threatened by the SEC.

 

Ex A- 4

 

Exhibit B

 

FORM OF OPINION OF TAX COUNSEL FOR THE COMPANY AND THE SUBSIDIARIES

 

1.                           commencing with the Company’s taxable year ended December 31, 2013 through its taxable year ended December 31, 2016, the Company has been organized and operated in conformity with the requirements for qualification as a REIT under the Code, and the Company’s organization and current and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code for its taxable year ending December 31, 2017 and thereafter;

 

2.                           the Operating Partnership is classified as a partnership for United States federal income tax purposes and not as an association taxable as a corporation or a “publicly traded partnership” taxable as a corporation under the Code; and

 

3.                           the statements under the captions “Material Federal Income Tax Considerations” and “Additional Federal Income Tax Considerations” in the Prospectus, insofar as such statements purport to summarize certain provisions of documents and legal matters referred to therein and reviewed by us as described above, are correct and fairly summarize such provisions and legal matters in all material respects, subject to the qualifications and assumptions stated therein.

 

Ex B- 1

 

Exhibit C

 

FORM OF OPINION OF IN-HOUSE COUNSEL FOR THE COMPANY AND THE SUBSIDIARIES

 

1.                           Except as disclosed in the Disclosure Package and the Prospectus, no material agreement to which any Subsidiary is a party prohibits or restricts any Subsidiary, directly or indirectly, from paying dividends to the Company, or from making any other distribution with respect to such Subsidiary’s capital stock, partnership interests, membership interests or other equity interests, as applicable, or from repaying to the Company or any other Subsidiary any amounts which may from time to time become due under any loans or advances to such Subsidiary from the Company or such other Subsidiary, or from transferring any such Subsidiary’s property or assets to the Company or to any other Subsidiary.

 

2.                           To my knowledge, neither the Company nor any of the Subsidiaries is in violation of any term or provision of its organizational documents, is in breach of, or in default under (nor has any event occurred which with notice, lapse of time, or both would constitute a breach of, or default under) any material agreement of such entity or under any law, regulation or rule or any decree, judgment or order applicable to the Company or any of the Subsidiaries, except such breaches or defaults that, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the assets, business, operations, earnings, properties or condition (financial or otherwise) of the Company and the Subsidiaries taken as a whole.

 

3.                           To my knowledge, there are no actions, suits or proceedings, inquiries, or investigations pending or threatened against the Company, any of the Subsidiaries or the Advisor or any of their respective officers and directors or to which the properties, assets or rights of any such entity are subject, at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or agency that are required to be disclosed in the General Disclosure Package or the Prospectus but are not so disclosed or that would reasonably be expected to materially and adversely affect the ability of the Company, any of the Subsidiaries or the Advisor to carry out the transactions contemplated by the Underwriting Agreement..

 

4.                           To my knowledge, no individual or entity has the right, which has not been waived, to require the registration under the Securities Act of any sale of securities issued by the Company, by reason of the filing or effectiveness of the Registration Statement.

 

5.                           The execution, delivery and performance of the Underwriting Agreement by the Company and the Operating Partnership and the consummation by the Company and the Operating Partnership of the transactions contemplated by the Underwriting Agreement do not and will not conflict with, or result in any breach of, or constitute a default under (nor constitute any event which with notice, lapse of time, or both would constitute a breach of or default under), any material agreement to which the Company or any of the Subsidiaries is a party.

 

6.                           The issuance and sale of the Securities and the Series B Preferred Units and the issuance of the shares of Common Stock issuable upon conversion of the Securities and the Common Units issuable upon conversion of the Series B Preferred Units are not subject to preemptive or other similar rights arising under any agreement known to such counsel to which the Company or any of the Subsidiaries is a party.

 

Ex C- 1

 

7.                           None of the issued and outstanding common units representing limited partner interests in the Operating Partnership or Preferred Units representing limited partner interests in the Operating Partnership have been issued or sold in violation of preemptive or similar rights arising under any material agreement of the Operating Partnership, and the issuance of the Series B Preferred Units representing limited partner interests in the Operating Partnership to the Company in connection with the Company’s sale of the Securities and the Common Units issuable upon conversion of the Series B Preferred Units is not subject to preemptive or similar rights arising under any material agreement of the Operating Partnership.

 

8.                           All descriptions in the Disclosure Package or the Prospectus of contracts and other documents that constitute material agreements of the Company or any Subsidiary (including the Operating Partnership) are accurate in all material respects.

 

Ex C- 2

 

Exhibit D

 

FORM OF OPINION OF MARYLAND COUNSEL FOR THE COMPANY

 

1.                           The Company is validly existing as a corporation and in good standing under the MGCL as of the date of the Good Standing Certificate.

 

2.                           The Company has the corporate power to own, lease and operate its properties and to conduct its business as described in the General Disclosure Package and the Prospectus, and to enter into and perform is obligations under the Underwriting Agreement.

 

3.                           The authorized capital stock of the Company as of the date hereof consists of 200,000,000 shares of Common Stock, [5,500,000] shares of 5.50% Series B Preferred Stock, 10,000,000 shares of Series C Preferred Stock, and 37,000,000 shares of unclassified preferred stock.

 

4.                           The execution and delivery by the Company, and the performance on the date hereof by the Company of its obligations under, the Underwriting Agreement have been duly authorized by the Company.

 

5.                           The Underwriting Agreement has been duly executed and delivered by the Company.

 

6.                           The Board of Directors has duly adopted resolutions reserving up to        shares of the Company’s Common Stock, par value $0.01 (“Common Stock”), initially issuable upon the exercise of the general conversion right with respect to the Preferred Shares and up to      shares of Common Stock issuable upon the exercise of the change of control conversion right with respect to the Preferred Shares (such shares issuable upon exercise of either conversion right being referred to collectively as the “Conversion Shares”).  The Conversion Shares have been duly authorized and, when issued in accordance with the Charter, will be validly issued, fully paid and non-assessable.

 

7.                           The Preferred Shares have been duly authorized by the Company for issuance and sale and, when issued in accordance with the provisions of the Underwriting Agreement against receipt of the consideration contemplated thereby, the Preferred Shares will be validly issued, fully paid and non-assessable.

 

8.                           No holder of outstanding shares of capital stock of the Company has any statutory preemptive right under the MGCL, or any similar right under the Charter or the By-Laws of the Company to subscribe for any of the Preferred Shares or the Common Stock.

 

9.                           No holder of the Preferred Shares or Common Stock is subject to personal liability as such under the laws of the State of Maryland, which is the jurisdiction in which the Company is organized.

 

10.                    The execution, delivery and performance on the date hereof by the Company of the Underwriting Agreement (including the issuance and sale of the Preferred Shares) do not violate (i) Applicable Maryland Law or the Charter or the By-Laws of the Company or (ii) violate any Maryland court or administrative order, judgment or decree listed on Schedule 2 hereto that names the Company and is specifically directed to it or any of its property.

 

11.                    No approval or consent of, or registration or filing with, any Maryland court, governmental authority or regulatory agency is required to be obtained or made by the Company under the MGCL in connection with the execution, delivery and performance on the date hereof by the

 

Ex D- 1

 

Company of the Underwriting Agreement (including the issuance and sale of the Preferred Shares).

 

12.                    The Advisory Agreement has been duly authorized by the Company and, solely to the extent the MGCL applies thereto, duly executed and delivered by the Company.

 

13.                    The form of certificates evidencing the Preferred Shares and the Conversion Stock comply with the requirements of Section 2-211 of the MGCL and the Charter and By-Laws of the Company.

 

14.                    The information set forth in the Prospectus and Prospectus Supplement under the captions: “Risk Factors—Holders of the Series B Preferred Stock will have limited voting rights,” “Risk Factors—Your ownership of Series B Preferred Stock is subject to the ownership limits contained in our charter,” “Description of the Series B Preferred Stock,” “Description of Capital Stock,” “Material Provisions of Maryland Law and of our Charter and Bylaws,” “Description of Common Stock,” “Description of Preferred Stock,” “Restrictions on Ownership and Transfer,” “Risks Related to our Organization and Structure—Our charter contains provisions that may delay or prevent a change of control transaction,” “Risks Related to our Organization and Structure—Our board of directors may create and issue a class or series of preferred stock without stockholder approval,” “Risks Related to our Organization and Structure—Certain provisions of Maryland law could inhibit changes in control,” “Risks Related to our Organization and Structure—Our board of directors can take many actions without stockholder approval,” and “Risks Related to our Organization and Structure—Our rights and the rights of our stockholders to take action against our directors and officers are limited,” to the extent that such information constitutes matters of law or legal conclusions, has been reviewed by us and is accurate and complete in all material respects.  The Preferred Shares and the Conversion Shares conform as to legal matters in all material respects to the description thereof set forth in the Prospectus Supplement under the captions “Description of the Series B Preferred Stock,” “Description of Capital Stock,” “Description of Common Stock,” and “Description of Preferred Stock.”

 

Ex D- 2

Exhibit 1.2

 

Execution Version

 

 

ASHFORD HOSPITALITY PRIME, INC.

 

(a Maryland corporation)

 

5,750,000 Shares of Common Stock

 

UNDERWRITING AGREEMENT

 

Dated:  March 2, 2017

 

 

 

Ashford Hospitality Prime, Inc.

 

(a Maryland corporation)

 

5,750,000 Shares of Common Stock

 

(Par Value $0.01 Per Share)

 

UNDERWRITING AGREEMENT

 

March 2, 2017

 

UBS Securities LLC

Morgan Stanley & Co. LLC

 

c/o UBS Securities LLC

1285 Avenue of the Americas

New York, New York 10019

 

c/o Morgan Stanley & Co. LLC

1585 Broadway

New York, New York 10036

 

as Representatives of the several Underwriters

named in Schedule A hereto

 

Ladies and Gentlemen:

 

Ashford Hospitality Prime, Inc., a Maryland corporation (the “ Company ”), Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership and the Company’s operating partnership (the “ Operating Partnership ”), and Ashford Hospitality Advisors LLC, a Delaware limited liability company (the “ Advisor ”), confirm their respective agreements with UBS Securities LLC (“ UBS ”) and Morgan Stanley & Co. LLC (“ Morgan Stanley ”) and each of the Underwriters named in Schedule A hereto (collectively, the “ Underwriters ,” which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom UBS and Morgan Stanley are acting as representatives (in such capacity, the “ Representatives ”), with respect to (i) the sale by the Company and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of shares of Common Stock, par value $0.01 per share, of the Company (“ Common Stock ”) set forth in Schedule A hereto and (ii) the grant by the Company to the Underwriters, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of 862,500 additional shares of Common Stock.  The aforesaid 5,750,000 shares of Common Stock (the “ Initial Securities ”) to be purchased by the Underwriters and all or any part of the 862,500 shares of Common Stock subject to the option described in Section 2(b) hereof (the “ Option Securities ”) are herein called, collectively, the “ Securities .”

 

The Company and the Operating Partnership understand that the Underwriters propose to make a public offering of the Securities as soon as the Representatives deem advisable after this Agreement has been executed and delivered.

 

The Company has filed with the Securities and Exchange Commission (the “ Commission ”), a registration statement on Form S-3 (File No. 333-200718), including the related base prospectus, covering

 

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the offer and sale of certain securities of the Company, including the Securities, under the Securities Act of 1933, as amended (the “ 1933 Act ”). The registration statement, including the amendment thereto, is effective under the 1933 Act, and the rules and regulations promulgated thereunder (the “ 1933 Act Regulations ”). Promptly after execution and delivery of this Agreement, the Company will prepare and file a prospectus in accordance with the provisions of Rule 430B of the 1933 Act Regulations (“ Rule 430B ”) and paragraph (b) of Rule 424 (“ Rule 424(b) ”) of the 1933 Act Regulations. Any information included in a prospectus or prospectus supplement deemed or retroactively deemed to be part of such registration statement that was omitted from such registration statement at the time it became effective but that is deemed to be part of and included in such registration statement pursuant to Rule 430B of the 1933 Act Regulations is referred to as “Rule 430B Information.” Each preliminary prospectus, including the base prospectus and preliminary prospectus supplement, used in connection with the offering of the Securities that omitted Rule 430B Information, including any documents incorporated or deemed to be incorporated by reference therein, are collectively referred to herein as a “preliminary prospectus.” Such registration statement, as of any time, means such registration statement as amended by any post-effective amendments thereto at such time, including the exhibits and any schedules thereto at such time, the documents incorporated or deemed to be incorporated by reference therein at such time pursuant to Item 12 of Form S-3 under the 1933 Act and the information otherwise deemed to be a part thereof as of such time pursuant to Rule 430B, is referred to herein as the “Registration Statement;” provided , however , that the “Registration Statement” without reference to a time means such registration statement as amended by any post-effective amendments thereto as of the time of the first contract of sale for the Securities, which time shall be considered the “new effective date” of such registration statement with respect to the Securities within the meaning of paragraph (f)(2) of Rule 430B, including the exhibits and schedules thereto as of such time, the documents incorporated or deemed incorporated by reference therein at such time pursuant to Item 12 of Form S-3 under the 1933 Act and the information otherwise deemed to be a part thereof as of such time pursuant to the Rule 430B.  If the Company files another registration statement with the Commission to register a portion of the Securities pursuant to Rule 462(b) under the 1933 Act (the “ Rule 462 Registration Statement ”), then any reference to “Registration Statement” herein shall be deemed to include the Rule 462 Registration Statement.  The final prospectus, including the base prospectus and final prospectus supplement, in the form first furnished or made available to the Underwriters for use in connection with the offering of the Securities, including the documents incorporated or deemed to be incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, are collectively referred to herein as the “Prospectus.” For purposes of this Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system or any successor system (“ EDGAR ”).

 

As used in this Agreement:

 

“ Applicable Time ” means 8:35 a.m., New York time, on March 2, 2017 or such other time as agreed by the Company and the Representatives.

 

“ General Disclosure Package ” means any Issuer General Use Free Writing Prospectuses issued at or prior to the Applicable Time, the most recent preliminary prospectus relating to the Securities (including any documents incorporated therein by reference) that is distributed to investors prior to the Applicable Time and the information included on Schedule B hereto, all considered together.

 

“ Issuer Free Writing Prospectus ” means any “issuer free writing prospectus,” as defined in Rule 433 of the 1933 Act Regulations (“ Rule 433 ”), including without limitation any “free writing prospectus” (as defined in Rule 405 of the 1933 Act Regulations (“ Rule 405 ”)) relating to

 

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the Securities that is (i) required to be filed with the Commission by the Company, (ii) a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission, or (iii) exempt from filing with the Commission pursuant to Rule 433(d)(5)(i) because it contains a description of the Securities or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).

 

“ Issuer General Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors (other than a “ bona fide electronic road show,” as defined in Rule 433), as evidenced by its being specified in Schedule C hereto.

 

“ Issuer Limited Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.

 

“ Testing-the-Waters Communication ” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the 1933 Act.

 

“ Written Testing-the-Waters Communication ” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the 1933 Act.

 

All references in this Agreement to financial statements and schedules and other information which is “contained,” “included” or “stated” (or other references of like import) in the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to include all such financial statements and schedules and other information incorporated or deemed incorporated by reference in the Registration Statement, any preliminary prospectus or the Prospectus, as the case may be, prior to the execution and delivery of this Agreement; and all references in this Agreement to amendments or supplements to the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to include the filing of any document under the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”), and the rules and regulations promulgated thereunder (the “ 1934 Act Regulations ”), incorporated or deemed to be incorporated by reference in the Registration Statement, such preliminary prospectus or the Prospectus, as the case may be, at or after the execution and delivery of this Agreement.

 

SECTION 1.                             Representations and Warranties .

 

(a)                                  Representations and Warranties by the Company and the Operating Partnership .  Each of the Company and the Operating Partnership, jointly and severally, represents and warrants to each Underwriter as of the date hereof, the Applicable Time, the Closing Time (as defined below) and any Date of Delivery (as defined below), and agrees with each Underwriter, as follows:

 

(i)                                      Registration Statement and Prospectuses .  The Company meets the requirements for use of Form S-3 under the 1933 Act and the Securities have been and remain eligible for registration by the Company on such shelf registration statement. Each of the Registration Statement and any post-effective amendment thereto has become effective under the 1933 Act.  No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the 1933 Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the knowledge of the Company, contemplated.  The Company has complied with each request (if any) from the Commission for additional information.

 

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Each of the Registration Statement and any post-effective amendment thereto, at the time of its effectiveness and at each deemed effective date with respect to the Underwriters pursuant to Rule 430B(f)(2) under the 1933 Act Regulations, complied in all material respects at the time it became effective with the requirements of the 1933 Act and the 1933 Act Regulations.  Each preliminary prospectus (including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment or supplement thereto), any supplement thereto or any prospectus wrapper prepared in connection therewith, and the Prospectus complied in all material respects at the time it was filed with the 1933 Act and the 1933 Act Regulations.  Each preliminary prospectus delivered to the Underwriters for use in connection with this offering was identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, when they became effective or at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the 1934 Act Regulations.

 

(ii)                                   Testing-the-Waters Materials .  The Company (A) has not engaged in any Testing-the-Waters Communication and (B) has not authorized anyone to engage in Testing-the-Waters Communications.  The Company has not distributed any Written Testing-the-Waters Communications.

 

(iii)                                No Material Adverse Change .  Except as otherwise stated therein, since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package or the Prospectus, (A) there has not been any change, or any development or event that reasonably could be expected to result in a change, that has or reasonably could be expected to have a material adverse effect on the assets, business, operations, earnings, properties, condition (financial or otherwise) or prospects of the Company, the Operating Partnership and their respective subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a “ Material Adverse Effect ”), (B) there has not been any transaction that is material to the Company, the Operating Partnership and their respective subsidiaries considered as one enterprise entered into or agreed to be entered into by the Company, the Operating Partnership or any of their subsidiaries, (C) there has not been any obligation, contingent or otherwise, directly or indirectly incurred by the Company, the Operating Partnership or any subsidiary that is material to the Company, the Operating Partnership and their subsidiaries considered as one enterprise, and (D) except for regular quarterly dividends on the Common Stock and the Company’s 5.50% Series B Cumulative Convertible Preferred Stock, par value $0.01 per share (the “ Series B Preferred Stock ”) and regular quarterly distributions on the limited partner interests in the Operating Partnership (“ OP Units ”), there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock or by the Operating Partnership on any of its partnership interests.

 

(iv)                               Good Standing of the Company .  The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Maryland and has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement and, as the sole managing member of the sole general partner of the Operating Partnership, to cause the Operating Partnership to enter into and perform the Operating Partnership’s obligations under this Agreement; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by

 

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reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect.

 

(v)                                  Good Standing of the Operating Partnership; Partnership Agreement .  The Operating Partnership has been duly formed and is validly existing as a limited partnership in good standing under the laws of the State of Delaware and has partnership power and authority to own or lease, as the case may be, and to operate its properties and to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement; and the Operating Partnership is duly qualified as a foreign partnership to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect.  The Company is the sole managing member of the sole general partner of the Operating Partnership.  The aggregate percentage interests of the Company and the limited partners in the Operating Partnership are as set forth in the Registration Statement, the General Disclosure Package and the Prospectus.  The Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership has been duly and validly authorized, executed and delivered by or on behalf of the partners of the Operating Partnership and constitutes a valid and binding agreement of the parties thereto, enforceable in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or affecting creditors’ rights and general principles of equity and except as rights to indemnity and contribution thereunder may be limited by applicable law or policies underlying such law.

 

(vi)                               Good Standing of Subsidiaries .  Each subsidiary of the Company has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its incorporation or organization, has corporate or similar power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify could not reasonably be expected to result in a Material Adverse Effect.  All of the issued and outstanding capital stock or other ownership interests of each subsidiary has been duly authorized and validly issued, is (as applicable) fully paid and non-assessable (except to the extent such non-assessability may be affected by Section 17-607 of the Delaware Revised Uniform Limited Partnership Act or Section 18-607 of the Delaware Limited Liability Company Act) and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity, other than (i) as described in the Registration Statement, the General Disclosure Package and the Prospectus and (ii) any security interest, mortgage, pledge, lien, encumbrance, claim or equity in connection with indebtedness described in the Registration Statement, the General Disclosure Package and the Prospectus.  None of the outstanding shares of capital stock or other ownership interests of any subsidiary was issued in violation of the preemptive or similar rights of any securityholder of such subsidiary.  The Company does not own or control, directly or indirectly, any corporation, association or other entity that is or will be a “significant subsidiary” (within the meaning of Rule 1-02(w) of Regulation S-X) other than the entities listed on Schedule E hereto.  For the purposes of this Agreement, “subsidiary” means each direct and indirect subsidiary of the Company, including, without limitation, the Operating Partnership and its subsidiaries.

 

(vii)                            Restrictions on Distributions .  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, no subsidiary of the Company is prohibited

 

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or restricted, directly or indirectly, from paying any distributions to the Company or the Operating Partnership, or from making any other distribution on such subsidiary’s equity interests, or from repaying to the Company or any other subsidiary any amounts that may from time to time become due under any loans or advances to such subsidiary from the Company or such other subsidiary, or from transferring any of such subsidiary’s property or assets to the Company or any other subsidiary of the Company.

 

(viii)                         Capitalization .  The authorized, issued and outstanding shares of capital stock of the Company are as set forth in the Registration Statement, the General Disclosure Package and the Prospectus (except for subsequent issuances, if any, pursuant to this Agreement, pursuant to reservations, agreements or employee benefit plans referred to in the Registration Statement, the General Disclosure Package and the Prospectus or pursuant to the exercise, redemption, or exchange of convertible or exchangeable securities, options or warrants referred to in the Registration Statement, the General Disclosure Package and the Prospectus, including OP Units).  The issued and outstanding shares of capital stock of the Company, have been duly authorized and validly issued and are fully paid and non-assessable.  None of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any securityholder of the Company.  The issued and outstanding OP Units have been duly authorized for issuance by the Operating Partnership to the holders thereof and are validly issued and fully paid.  The issuance of such OP Units was exempt from registration or qualification under the 1933 Act and applicable state securities laws.  None of such OP Units were issued in violation of the preemptive or other similar rights of any securityholder of the Operating Partnership or any other person or entity.  The OP Units to be issued by the Operating Partnership to the Company in connection with the contribution of the net proceeds from the sale of the Securities to the Operating Partnership will be, on or prior to the Closing Time, duly authorized for issuance by the Operating Partnership to the holders thereof and at the Closing Time, will be validly issued and fully paid.  The issuance of such OP Units will be exempt from registration or qualification under the 1933 Act and applicable state securities laws.  None of such OP Units to be issued will be in violation of the preemptive or other similar rights of any securityholder of the Operating Partnership or any other person or entity.  Except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, there are no outstanding options, warrants or other rights to purchase, agreements or other obligations to issue, or rights to convert any obligations into or exchange any securities or interests for shares of the Company’s or its subsidiaries’ capital stock, including OP Units or other ownership interests of the Operating Partnership.

 

(ix)                               Compliance with Laws .  The Company and the subsidiaries are in compliance with all applicable federal, state, local or foreign laws, regulations, rules, decrees, judgments and orders, including those relating to transactions with affiliates, except where any failures to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(x)                                  No Defaults . Neither the Company nor any subsidiary is in breach of or in default under (nor has any event occurred which with notice, lapse of time, or both would constitute a breach of, or default under) (A) its respective organizational documents, or (B) in the performance or observance of any obligation, agreement, covenant or condition contained in any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Company or any subsidiary is a party or by which any of them or their respective properties is bound, except in the case of clause (B), for such breaches or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

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(xi)                               No Conflicts . The execution, delivery and performance of this Agreement and consummation of the transactions contemplated herein (including the Company’s issuance and sale of the Securities and its use of proceeds from the sale of the Securities as described under the caption “Use of Proceeds”) will not (i) conflict with, or result in any breach of, or constitute a default under (nor constitute any event which with notice, lapse of time, or both would constitute a breach of, or default under), (A) any provision of the organizational documents of the Company or any subsidiary, or (B) any provision of any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Company or any subsidiary is a party or by which any of them or their respective assets or properties may be bound or affected, or under any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to the Company or any subsidiary, except in the case of this clause (B) for such breaches or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; or (ii) result in the creation or imposition of any lien, charge, claim or encumbrance upon any property or asset of the Company or any subsidiary.

 

(xii)                            Due Authorization of Agreement .  This Agreement has been duly authorized, executed and delivered by the Company and the Operating Partnership and is a legal, valid and binding agreement of the Company and the Operating Partnership.

 

(xiii)                         Authorization of Advisory Agreement . The Third Amended and Restated Advisory Agreement, dated June 10, 2015, by and among the Company, the Operating Partnership and the Advisor (the “ Advisory Agreement ”) has been duly authorized, executed and delivered by the Company and the Operating Partnership and constitutes a legal, valid and binding agreement of the Company and the Operating Partnership enforceable against the Company and the Operating Partnership in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general principles of equity.

 

(xiv)                        No Consents; No Approvals .  No approval, authorization, consent or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency or any other third party is required in connection with the Company’s or the Operating Partnership’s execution, delivery and performance of this Agreement, their consummation of the transactions contemplated herein or the Company’s sale and delivery of the Securities, other than (i) such as have been obtained, or will have been obtained at the Closing Time or the relevant Date of Delivery, as the case may be, under the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, (ii) such approvals as have been obtained in connection with the approval of the listing of the Securities on the New York Stock Exchange (“ NYSE ”), (iii) such approvals as have been obtained under the rules of the Financial Industry Regulatory Authority (“ FINRA ”), (iv) any necessary qualification under the securities or blue sky laws of the various state jurisdictions in which the Securities are being offered by the Underwriters, and (v) such approvals, authorizations, consents or orders or filings, the absence of which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(xv)                           Licenses .  Each of the Company and the subsidiaries has all necessary licenses, authorizations, consents and approvals and has made all necessary filings required under any federal, state, local or foreign law, regulation or rule, and has obtained all necessary authorizations, consents and approvals from other persons, required in order to conduct their respective businesses as described in the Registration Statement, the General Disclosure Package and the Prospectus, except to the extent that any failure to have any such licenses, authorizations, consents or approvals, to make any such filings or to obtain any such authorizations, consents or

 

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approvals could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Neither the Company nor any of the subsidiaries is in violation of, in default under, or has received any notice regarding a possible violation, default or revocation of any such license, authorization, consent or approval or any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to the Company or any of the subsidiaries, the effect of which could reasonably be expected to result in a Material Adverse Effect.  No such license, authorization, consent or approval contains a materially burdensome restriction that is not adequately disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.  Neither the Company nor any of the subsidiaries is required by any applicable law to obtain accreditation or certification from any governmental agency or authority in order to provide the products and services that it currently provides or that it proposes to provide as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, except to the extent that any failure to have such accreditation or certification could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(xvi)                        Emerging Growth Company Status .  From the time of the initial filing of the Registration Statement to the Commission through the date hereof, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of the 1933 Act (an “ Emerging Growth Company ”).

 

(xvii)                     Accurate Disclosure .  Neither the Registration Statement nor any amendment thereto, at the times they became effective, at the Closing Time or at any Date of Delivery, contained, contains or will contain an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  As of the Applicable Time, neither (A) the General Disclosure Package nor (B) any individual Issuer Limited Use Free Writing Prospectus, when considered together with the General Disclosure Package,  included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper), as of its issue date, at the time of any filing with the Commission pursuant to Rule 424(b), at the Closing Time or at any Date of Delivery, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The documents incorporated or deemed to be incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, when read together with the other information in the Registration Statement, the General Disclosure Package or the Prospectus, as the case may be, (a) at the time the Registration Statement became effective, (b) at the earlier of the time the Prospectus was first used and the date and time of the first contract of sale of Securities and (c) at the Closing Time or at any Date of Delivery, did not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

The representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement (or any amendment thereto), the General Disclosure Package, any individual Issuer Limited Use Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto (including any prospectus wrapper)), made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use therein.  For purposes of this Agreement, the only information so furnished shall be the information in the first paragraph under the heading

 

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“Underwriting—Commissions and Discounts” and the information in the second and third paragraphs and in the last sentence of the fourth paragraph under the heading “Underwriting—Price Stabilization, Short Positions and Penalty Bids” in the Prospectus (collectively, the “ Underwriter Information ”).

 

(xviii)                  Issuer Free Writing Prospectuses .  No Issuer Free Writing Prospectus conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, including any document incorporated or deemed incorporated by reference therein, and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified.

 

(xix)                        Ineligible Issuer .  At the time of filing the Registration Statement and any post-effective amendment thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the 1933 Act Regulations) of the Securities and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405, without taking account of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an ineligible issuer.

 

(xx)                           No Litigation .  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there are no actions, suits, proceedings, inquiries or investigations pending or, to the knowledge of the Company, threatened against the Company, any subsidiary or any of their respective officers and directors or to which the properties, assets or rights of any such entity are subject, at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or agency, which is required to be disclosed in the Registration Statement, or where in any such case (i) there is a reasonable possibility that such action, suit or proceeding will be determined adversely to the Company or such subsidiary and (ii) if so determined adversely, could reasonably be expected to result in a judgment, decree, award or order having a Material Adverse Effect.

 

(xxi)                        Financial Statements; Non-GAAP Financial Measures .  The financial statements included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, together with the related schedules and notes, present fairly: (1) the financial position of the Company and the Operating Partnership on a consolidated basis at the dates indicated; and (2) the several statements of operations, comprehensive income (loss), equity (deficit) and cash flows for the Bardessono Inn & Spa in Yountville, California for the periods specified; said financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved.  The supporting schedules, if any, present fairly in accordance with GAAP the information required to be stated therein.  The selected financial data and any summary financial information included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included therein.  The pro forma financial statements and the related notes thereto included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission’s rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein.  The pro forma financial statements in the Registration Statement comply as to form in all material respects with the applicable

 

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requirements of Regulation S-X of the 1933 Act.  No other financial statements or supporting schedules of the Company or any of its subsidiaries are required to be included in or incorporated by reference the Registration Statement, the General Disclosure Package or the Prospectus under the 1933 Act or the 1933 Act Regulations.  All disclosures contained in the Registration Statement, the General Disclosure Package or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply with Regulation G of the 1934 Act and Item 10 of Regulation S-K of the 1933 Act, to the extent applicable. The interactive data in eXtensible Business Reporting Language incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, if any, fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto.

 

(xxii)                     Independent Public Accountants .  The accountants who certified the financial statements and supporting schedules included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus are, and were during the periods covered by their reports, registered independent public accountants as and to the extent required by the 1933 Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations and the Public Company Accounting Oversight Board (United States).

 

(xxiii)                  Description of Securities .  The Common Stock conforms in all material respects to the description thereof contained in the Registration Statement, the General Disclosure Package and the Prospectus and such description conforms in all material respects to the rights set forth in the instruments defining the same.

 

(xxiv)                 Registration Rights .  Except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, there are no persons with registration rights or other similar rights to have any equity or debt securities, including securities that are convertible into or exchangeable or redeemable for equity securities, registered for sale pursuant to the Registration Statement or otherwise registered for sale by the Company or the Operating Partnership under the 1933 Act.

 

(xxv)                    Valid Issuance of Securities .  The Securities to be purchased by the Underwriters from the Company have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and, when issued and duly delivered by the Company pursuant to this Agreement against payment of the consideration set forth herein, will be validly issued, fully paid and non-assessable, free and clear of any pledge, lien, encumbrance, security interest or other claim; and the issuance and sale of the Securities by the Company is not subject to the preemptive, resale rights, rights of first refusal or other similar rights arising by operation of law, under the organizational documents of the Company or under any agreement to which the Company or any subsidiary is a party or otherwise.

 

(xxvi)                 Registration and Listing of Securities .  At or before the Closing Time, the Securities will have been registered under Section 12(b) of the 1934 Act and approved for listing on the NYSE, subject to official notice of issuance.

 

(xxvii)              Absence of Manipulation .  Neither the Company nor any affiliate of the Company has taken, nor will the Company or any affiliate take, directly or indirectly, any action which is designed, or would be expected, to cause or result in, or which constitutes, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or to result in a violation of Regulation M under the 1934 Act.

 

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(xxviii)           No Registration as Broker .  Neither the Company nor any of its affiliates (i) is required to register as a “broker” or “dealer” in accordance with the provisions of the 1934 Act or the 1934 Act Regulations, or (ii) directly, or indirectly through one or more intermediaries, controls or has any other association with (within the meaning of Article I of the By-laws of FINRA) any member firm of FINRA.

 

(xxix)                 No Exempt Sales .  Except as described in the Registration Statement, the General Disclosure Package and the Prospectus, neither the Company nor any subsidiary has sold or issued any securities during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the 1933 Act, other than shares issued pursuant to employee benefit plans, qualified stock options plans or other employee compensation plans or pursuant to outstanding options, rights or warrants, that would not be required to be integrated with the sale of the Securities.

 

(xxx)                    Form of Certificate .  The form of certificate used to evidence the Common Stock will be in substantially the form filed or incorporated by reference, as the case may be, as an exhibit to the Registration Statement, and complies in all material respects with all applicable statutory requirements, with any applicable requirements of the organizational documents of the Company and the requirements of the NYSE.

 

(xxxi)                 Property .  The Company and its subsidiaries have good and indefeasible title in fee simple to, or a valid leasehold interest in, all real property described in the Registration Statement, the General Disclosure Package and the Prospectus, and good title to all personal property owned by them, in each case free and clear of all liens, security interests, pledges, charges, encumbrances, encroachments, restrictions, mortgages and defects, except such as are disclosed in the Registration Statement, the General Disclosure Package and the Prospectus or such as do not materially and adversely affect the value of such property and do not interfere with the use made or proposed to be made of such property by the Company and its subsidiaries.  Any real property, improvements, equipment and personal property held under lease by the Company or any subsidiary are held under valid, existing and enforceable leases, with such exceptions as are disclosed in the Registration Statement, the General Disclosure Package and the Prospectus or are not material and do not interfere with the use made or proposed to be made of such real property, improvements, equipment and personal property by the Company or such subsidiary.  The Company or a subsidiary has obtained an owner’s or leasehold title insurance policy, from a title insurance company licensed to issue such policy, on any real property owned in fee or leased, as the case may be, by the Company or any subsidiary, that insures the Company’s or the subsidiary’s fee or leasehold interest, as the case may be, in such real property, which policies include only commercially reasonable exceptions, and with coverages in amounts at least equal to amounts that are generally deemed in the Company’s industry to be commercially reasonable in the markets where the Company’s properties are located, or a lender’s title insurance policy insuring the lien of its mortgage securing the real property with coverage equal to the maximum aggregate principal amount of any indebtedness held by the Company or a subsidiary and secured by the real property.

 

(xxxii)              Condition of Real Property .  All real property owned or leased by the Company or a subsidiary is free of material structural defects and all building systems contained therein are in good working order in all material respects, subject to ordinary wear and tear or, in each instance, the Company has created an adequate reserve to effect reasonably required repairs, maintenance and capital expenditures.  To the knowledge of the Company and the Operating Partnership, water, storm water, sanitary sewer, electricity and telephone service are all available at the property lines of such property over duly dedicated streets or perpetual easements of record

 

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benefiting such property.  Except as described in the Registration Statement, the General Disclosure Package and the Prospectus, to the knowledge of the Company and the Operating Partnership, there is no pending or threatened special assessment, tax reduction proceeding or other action that, individually or in the aggregate, could reasonably be expected to increase or decrease the real property taxes or assessments of any of such property, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(xxxiii)           Mortgages .  The Company has provided to the Representatives true and complete copies of all credit agreements, mortgages, deeds of trust, guaranties, side letters, and other documents evidencing, securing or otherwise relating to any secured or unsecured indebtedness of the Company or any of its subsidiaries (collectively, the “ Loan Documents ”), and none of the Company and its subsidiaries that is party to any of the Loan Documents is in default thereunder, nor has an event occurred which with the passage of time or the giving of notice, or both, would become a default by any of them under any of the Loan Documents, except for any default that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  The Loan Documents encumbering any real property owned in fee or leased by the Company or a subsidiary (i) are not convertible (in the absence of foreclosure) into an equity interest in the real property or in the Company, the Operating Partnership or any subsidiary, and none of the Company, the Operating Partnership or the subsidiaries hold a participating interest therein, (ii) except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, are not and will not be cross-defaulted to any indebtedness other than indebtedness of the Company or any of the subsidiaries, and (iii) are not and will not be cross-collateralized to any property not owned by the Company, the Operating Partnership or any of the subsidiaries.

 

(xxxiv)          Description and Enforceability of Contracts .  The statements in the Registration Statement, the General Disclosure Package and the Prospectus under the headings “Summary—Recent Developments,” “Summary—The Offering,” “Risk Factors,” “Description of Capital Stock,” “Material Provisions of Maryland Law and of Our Charter and Bylaws,” “Partnership Agreement,” “Distribution Policy,” “Additional Federal Income Tax Considerations,” “Description of Common Stock,” “Restrictions on Ownership and Transfer,” and “Material Federal Income Tax Considerations,” insofar as such statements summarize legal matters, agreements, documents, proceedings or affiliate transactions discussed therein, are accurate and fair summaries of such legal matters, agreements, documents, proceedings or affiliate transactions in all material respects.  There are no contracts, leases or other documents which are required to be described in the Registration Statement, the General Disclosure Package or the Prospectus or to be filed as exhibits to the Registration Statement, which have not been so described and filed as required.  All agreements between the Company or any of its subsidiaries and any other party expressly referenced in the Registration Statement, the General Disclosure Package and the Prospectus are legal, valid and binding obligations of the Company or such subsidiary, as applicable, enforceable against the Company or such subsidiaries, as applicable, as appropriate, in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles and, to the knowledge of the Company and the Operating Partnership, no party is in breach or default under any such agreements, except for any breach or default that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

(xxxv)             Intellectual Property .  The Company and each subsidiary owns or possesses adequate licenses or other rights to use all patents, trademarks, service marks, trade names, copyrights, software and design licenses, trade secrets, manufacturing processes, other intangible

 

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property rights and know-how (collectively, “ Intangibles ”) necessary to entitle the Company and each subsidiary to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus, and neither the Company nor any subsidiary has received notice of infringement of or conflict with (and the Company knows of no such infringement of or conflict with) asserted rights of others with respect to any Intangibles that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(xxxvi)          Disclosure Controls; Internal Controls .  The Company, the Operating Partnership and the subsidiaries have established and maintain disclosure controls and procedures (as such term is defined in Rule 13a-15 and 15d-15 under the 1934 Act Regulations).  Such disclosure controls and procedures are designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s Chief Executive Officer and its Chief Financial Officer by others within those entities, and such disclosure controls and procedures are effective to perform the functions for which they were established.  The Company, the Operating Partnership and the subsidiaries have established and maintain effective internal control over financial reporting (as such term is defined in Rule 13a-15 and 15d-15 under the 1934 Act Regulations).  Such internal control over financial reporting is designed to provide reasonable assurance that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of:  (i) any significant deficiencies and material weaknesses in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s internal controls; and, except as described in the Registration Statement, the General Disclosure Package and the Prospectus, since the Company’s inception, there has been (1) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (2) no significant changes in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting, including any corrective actions with regard to significant deficiencies.

 

(xxxvii)       Compliance with the Sarbanes-Oxley Act.   There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the “ Sarbanes-Oxley Act ”), including Section 402 related to loans and Sections 302 and 906 related to certifications.

 

(xxxviii)    Taxes .  Each of the Company, the Operating Partnership and their subsidiaries has filed on a timely basis (including in accordance with any applicable extensions) all necessary federal, state, local and foreign income and franchise tax returns required to be filed through the date hereof or have properly requested extensions thereof, and have paid all taxes shown as due thereon, and if due and payable, any related or similar assessment, fine or penalty levied against the Company, the Operating Partnership or any of the subsidiaries.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, no tax deficiency has been asserted against any such entity, and the Company, the Operating Partnership and their subsidiaries do not know of any tax deficiency that is likely to be asserted

 

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against any such entity that, individually or in the aggregate, if determined adversely to any such entity, could reasonably be expected to have a Material Adverse Effect.  All tax liabilities are adequately provided for on the respective books of the Company and the subsidiaries.

 

(xxxix)          Insurance .  Each of the Company and the subsidiaries maintains insurance (issued by insurers of recognized financial responsibility) of the types and in the amounts generally deemed adequate for their respective businesses and consistent with insurance coverage maintained by similar companies in similar businesses, including, but not limited to, insurance covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction, environmental liabilities, acts of vandalism, terrorism, earthquakes, flood and all other risks customarily insured against, all of which insurance is in full force and effect.

 

(xl)                               Environmental Law Compliance .  Neither the Company nor any of the subsidiaries is in violation, or has received notice of any violation with respect to, any applicable environmental, safety or similar law, regulation or rule applicable to the business of the Company or any of the subsidiaries, except any such violation of law, regulation or rule that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  The Company and the subsidiaries have received all permits, licenses or other approvals required of them under applicable federal and state occupational safety and health and environmental laws, regulations and rules to conduct their respective businesses, and the Company and the subsidiaries are in compliance with all terms and conditions of any such permit, license or approval, except any such violation of law, regulation or rule, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals that individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  Except as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, (i) none of the Operating Partnership, the Company, any of the subsidiaries nor, to the knowledge of the Operating Partnership and the Company, any other owners of the property at any time or any other party has at any time, handled, stored, treated, transported, manufactured, spilled, leaked, or discharged, dumped, transferred or otherwise disposed of or dealt with, Hazardous Materials (as hereinafter defined) on, in, under, to or from any real property leased, owned or controlled, including any real property underlying any loan held or to be held by the Company or the subsidiaries (collectively, the “ Real Property ”), other than by any such action taken in compliance with all applicable Environmental Statutes (hereinafter defined) or by the Operating Partnership, the Company, any of the subsidiaries or any other party in connection with the ordinary use of residential, retail or commercial properties owned by the Operating Partnership; (ii) the Operating Partnership and the Company do not intend to use the Real Property or any subsequently acquired properties for the purpose of using, handling, storing, treating, transporting, manufacturing, spilling, leaking, discharging, dumping, transferring or otherwise disposing of or dealing with Hazardous Materials other than by any such action taken in compliance with all applicable Environmental Statues or by the Operating Partnership, the Company, any of the subsidiaries or any other party in connection with the ordinary use of residential, retail or commercial properties owned by the Operating Partnership; (iii) none of the Operating Partnership, the Company, nor any of the subsidiaries knows of any seepage, leak, discharge, release, emission, spill, or dumping of Hazardous Materials into waters on or adjacent to the Real Property or any other real property owned or occupied by any such party, or onto lands from which Hazardous Materials might seep, flow or drain into such waters; (iv) none of the Operating Partnership, the Company, nor any of the subsidiaries has received any notice of, or has any knowledge of any occurrence or circumstance that, with notice or passage of time or both, would give rise to a claim under or pursuant to any federal, state or local environmental statute, regulation or rule or under common

 

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law, pertaining to Hazardous Materials on or originating from any of the Real Property or any assets described in the Prospectus or any other real property owned or occupied by any such party or arising out of the conduct of any such party, including without limitation a claim under or pursuant to any Environmental Statute; (v) the Real Property is not included or, to the Company’s and the Operating Partnership’s knowledge, proposed for inclusion on the National Priorities List issued pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601-9675 (the “ CERCLA ”) by the United States Environmental Protection Agency or, to the Operating Partnership’s and the Company’s knowledge, proposed for inclusion on any similar list or inventory issued pursuant to any other Environmental Statute or issued by any other Governmental Authority (as hereinafter defined); (vi) in the operation of the Company’s and the Operating Partnership’s businesses, the Company acquires, before acquisition of any real property, an environmental assessment of the real property and, to the extent they become aware of any condition that could reasonably be expected to result in liability associated with the presence or release of a Hazardous Material, or any violation or potential violation of any Environmental Statute, the Company and the Operating Partnership take all commercially reasonable action necessary or advisable (including any capital improvements) for clean-up, closure or other compliance with such Environmental Statute.  There are no costs or liabilities associated with the Real Property pursuant to any Environmental Statute (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with any Environmental Statute or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  None of the entities that prepared Phase I or other environmental assessments with respect to the Real Property was employed for such purpose on a contingent basis or has any substantial interest in the Company or any of the subsidiaries, and none of their directors, officers or employees is connected with the Company or any of the subsidiaries as a promoter, selling agent, trustee, officer, director or employee.  None of the Operating Partnership, the Company nor any subsidiary knows of any violation of any municipal, state or federal law, rule or regulation (including those pertaining to environmental matters) concerning the Real Property or any part thereof that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  The Real Property complies with all applicable zoning laws, ordinances, regulations and deed restrictions or other covenants in all material respects and, if and to the extent there is a failure to comply, such failure does not materially impair the value of any of the Real Property and will not result in a forfeiture or reversion of title.  None of the Operating Partnership, the Company nor any subsidiary has received from any governmental authority any written notice of any condemnation of or zoning change affecting the Real Property or any part thereof, and none of the Operating Partnership, the Company nor any subsidiary knows of any such condemnation or zoning change which is threatened and which, individually or in the aggregate, if consummated could reasonably be expected to have a Material Adverse Effect.  All liens, charges, encumbrances, claims, or restrictions on or affecting the properties and assets (including the Real Property) of the Operating Partnership or any of the subsidiaries that are required to be described in the Prospectus are disclosed therein.  No lessee of any portion of any of the Real Property is in default under any of the leases governing such properties and there is no event which, but for the passage of time or the giving of notice or both would constitute a default under any of such leases, except such defaults that individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  No tenant under any lease pursuant to which the Operating Partnership or any of the subsidiaries leases any Real Property has an option or right of first refusal to purchase the premises leased thereunder or the building of which such premises are a part, except as such options or rights of first refusal that, individually or in the aggregate, if exercised, could not reasonably be expected to have a Material Adverse Effect.

 

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As used herein, “ Hazardous Material ” includes, without limitation any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, toxic substances, or related materials, asbestos or any hazardous material as defined by any federal, state or local environmental law, regulation or rule including, without limitation, the CERCLA, the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections 1801-1819, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901-6992K, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11050, the Toxic Substances Control Act, 15 U.S.C. Sections 2601-2671, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections 136-136y, the Clean Air Act, 42 U.S.C. Sections 7401-7642, the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. Sections 1251-1387, the Safe Drinking Water Act, 42 U.S.C. Sections 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. Sections 651-678, as any of the above statutes may be amended from time to time, and in the regulations promulgated pursuant to each of the foregoing (individually, an “Environmental Statute” and collectively the “ Environmental Statutes ”) or by any federal, state or local governmental authority having or claiming jurisdiction over the properties and assets described in the General Disclosure Package or the Prospectus (a “ Governmental Authority ”).

 

(xli)                            Labor Laws; No Labor Disputes .  Neither the Company nor any of its subsidiaries is in violation of or has received notice of any violation with respect to any federal or state law, regulation or rule relating to discrimination in the hiring, termination, promotion, employment or pay of employees, nor any applicable federal or state wages and hours law, nor any state law, regulation or rule precluding the denial of credit due to the neighborhood in which a property is situated, the violation of any of which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There are no existing or, to the knowledge of the Company or the Operating Partnership, threatened labor disputes with the employees of the Company or any of its subsidiaries that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(xlii)                         ERISA .  The Company and each of its subsidiaries are in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ ERISA ”).  No “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company or any of the subsidiaries would have any material liability; the Company and each of the subsidiaries have not incurred and do not expect to incur material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (ii) Section 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (collectively, the “ Code ”).  Each “pension plan” for which the Company or any of its subsidiaries would have any material liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, that would cause the loss of such qualification.

 

(xliii)                      Past Issuances of Securities .  All securities issued by the Company, any of the subsidiaries or any trusts established by the Company or any subsidiary, have been issued and sold in compliance with (i) all applicable federal and state securities laws and the laws of the applicable jurisdiction of incorporation of the issuing entity, except as, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, and (ii) to the extent applicable to the issuing entity, the requirements of the NYSE.

 

(xliv)                     1933 Act Compliance .  In connection with this offering, the Company has not offered and will not offer its Common Stock or any other securities convertible into or

 

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exchangeable or exercisable or redeemable for Common Stock in a manner in violation of the 1933 Act; the Company has not distributed and will not distribute any prospectus or other offering material in connection with the offering of the Securities other than the Registration Statement, the Prospectus and any Issuer General Use Free Writing Prospectus.

 

(xlv)                        No Finder’s Fee .  Except for the Underwriters’ discounts and commissions payable by the Company to the Underwriters in connection with the offering of the Securities contemplated herein or as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company has not incurred any liability for any brokerage commission, finder’s fees or similar payments in connection with the offering of the Securities contemplated hereby.

 

(xlvi)                     Absence of Certain Relationships .  There is no relationship, direct or indirect, between or among the Company or any of its subsidiaries on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any of the subsidiaries on the other hand, which is required by the 1933 Act and the 1933 Act Regulations to be described in the Registration Statement, the General Disclosure Package or the Prospectus and which is not so described. The Company has not, directly or indirectly, including through any subsidiary, extended or maintained credit, arranged for the extension of credit, or renewed an extension of credit, in the form of a personal loan to or for any executive officer or director of the Company.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company has no lending or other commercial relationship with any affiliate of any Underwriter and the Company will not use any of the proceeds from the sale of the Securities to repay any indebtedness owed to any affiliate of any Underwriter.

 

(xlvii)                  Investment Company Act .  Neither the Company nor the Operating Partnership is required, or upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the General Disclosure Package and the Prospectus will be required, to register as an “investment company” under the Investment Company Act of 1940, as amended (the “ 1940 Act ”).

 

(xlviii)               REIT Status .  Commencing with the taxable year ended December 31, 2013, the Company has been organized and operated in conformity with the requirements for qualification and taxation as a real estate investment trust (a “ REIT ”) under the Code, and the current and proposed ownership and method of operation of the Company and the subsidiaries as described in the Registration Statement, the General Disclosure Package and the Prospectus will enable the Company to continue to meet the requirements for qualification and taxation as a REIT under the Code for the Company’s taxable years ending December 31, 2017 and thereafter. The Operating Partnership is and will be treated as a partnership within the meaning of Sections 7701(a)(2) and 761(a) of the Code and not as a publicly traded partnership taxable as a corporation under Section 7704 of the Code.  The Company intends to continue to qualify as a REIT for all subsequent years, and the Company does not know of any event that could reasonably be expected to cause the Company to fail to qualify as a REIT at any time.

 

(xlix)                     Ashford Trust REIT Status .  Ashford Hospitality Trust, Inc. qualified to be taxed as a REIT for its taxable years ended December 31, 2009 through December 31, 2013.

 

(l)                                      Foreign Corrupt Practices Act .  None of the Company, any of its subsidiaries, or, to the knowledge of the Company, any director, officer, affiliate, agent, employee or other person acting on behalf of the Company is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as

 

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amended, and the rules and regulations thereunder (the “ FCPA ”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Company and its subsidiaries and, to the knowledge of the Company, its affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

(li)                                   Money Laundering Laws .  The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of all jurisdictions, the rules and regulations thereunder and any applicable related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the “ Money Laundering Laws ”); and no action, suit or proceeding by or before any Governmental Authority involving the Company or any subsidiary with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

(lii)                                OFAC .  None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, affiliate, agent, employee or representative of the Company or any of its subsidiaries is an individual or entity (“ Person ”) that is, or is owned or controlled by a Person that is: (i) currently the subject or target of any sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“ OFAC ”), the United Nations Security Council (“ UNSC ”), the European Union, Her Majesty’s Treasury (“ HMT ”), or other relevant sanctions authority (collectively, “ Sanctions ”), nor (ii) located, organized or resident in a country or territory that is the subject of Sanctions; and the Company and the Operating Partnership will not directly or indirectly use the proceeds of the sale of the Securities, or lend, contribute or otherwise make available such proceeds to any subsidiaries, joint venture partners or other Person, to fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. Since inception, the Company and its subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

 

(liii)                             Actively Traded Security . The shares of Common Stock are “actively traded securities” excepted from the requirements of Rule 101 of Regulation M under the 1934 Act by subsection (c)(1) of such rule.

 

(liv)                            Statistical and Market-Related Data .  Any statistical and market-related data included in the Registration Statement, the General Disclosure Package or the Prospectus are based on or derived from sources that the Company believes, after reasonable inquiry, to be reliable and accurate and, to the extent required, the Company has obtained the written consent to the use of such data from such sources.

 

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(lv)                               Governmental Oversight .  The conduct of business by the Company and the subsidiaries as presently and proposed to be conducted is not subject to continuing oversight, supervision, regulation or examination by any governmental official or body of the United States or any other jurisdiction wherein the Company or the subsidiaries conduct or propose to conduct such business, except as described in the Registration Statement, the General Disclosure Package and the Prospectus and except such regulation as is applicable to commercial enterprises generally.

 

(lvi)                            Distribution of Offering Material .  The Company and its subsidiaries have not distributed, and prior to the later of the Closing Time and the completion of the distribution of the Securities, will not distribute, any offering material in connection with the offering or sale of the Securities other than any preliminary prospectus, the Prospectus, any Issuer Free Writing Prospectus, or any other materials, if any, permitted by the 1933 Act.

 

(b)          The Advisor represents and warrants to each Underwriter as of the date hereof, the Applicable Time, the Closing Time and any Date of Delivery, and agrees with each Underwriter, as follows:

 

(i)                                      Registration Statement and Prospectuses .  No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the 1933 Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the knowledge of the Advisor, contemplated.

 

(ii)                                   Good Standing of Advisor .  The Advisor has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware and has the limited liability company power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement.  The Advisor has no subsidiaries.  The Advisor is duly qualified as a foreign limited liability company to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to be so qualified could not (A) reasonably be expected to have, individually or in the aggregate, a material adverse effect on the assets, business, operations, earnings, management, properties, condition (financial or otherwise) or prospects of the Advisor or (B) prevent the consummation of the transactions contemplated hereby (the occurrence of any such effect or any such prevention described in the foregoing clauses (A) and (B) being referred to as an “ Advisor Material Adverse Effect ”).

 

(iii)                                No Material Adverse Change .  Except as otherwise stated therein, since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package or the Prospectus, (A) there has not been any Advisor Material Adverse Effect and (B) there has not been any material transaction entered into or any material transaction that is probable of being entered into by the Advisor, other than transactions in the ordinary course of business and transactions described in the Registration Statement, the General Disclosure Package and the Prospectus, as each may be amended or supplemented.

 

(iv)                               Compliance with Laws .  The Advisor is in compliance with all applicable federal, state, local or foreign laws, regulations, rules, decrees, judgments and orders, including those relating to transactions with affiliates, except where any failures to be in compliance could

 

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not, individually or in the aggregate, reasonably be expected to have an Advisor Material Adverse Effect.

 

(v)                                  No Defaults . The Advisor is not in breach of or in default under (nor has any event occurred which with notice, lapse of time, or both would constitute a breach of, or default under) (A) its certificate of formation or limited liability company agreement, or (B) in the performance or observance of any obligation, agreement, covenant or condition contained in any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Advisor is a party or by which it or its properties is bound, except in the case of clause (B), for such breaches or defaults that, individually or in the aggregate, could not reasonably be expected to have an Advisor Material Adverse Effect.

 

(vi)                               No Conflicts . The execution, delivery and performance of this Agreement and consummation of the transactions contemplated herein will not (i) conflict with, or result in any breach of, or constitute a default under (nor constitute any event which with notice, lapse of time, or both would constitute a breach of, or default under), (A) any provision of the certificate of formation or limited liability company agreement of the Advisor, or (B) any provision of any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Advisor is a party or by which the Advisor or its assets or properties may be bound or affected, or under any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to the Advisor, except in the case of this clause (B) for such breaches or defaults that, individually or in the aggregate, could not reasonably be expected to have an Advisor Material Adverse Effect; or (ii) result in the creation or imposition of any lien, charge, claim or encumbrance upon any property or asset of the Company or any subsidiary.

 

(vii)                            Due Authorization of Agreement .  This Agreement has been duly authorized, executed and delivered by the Advisor and is a legal, valid and binding agreement of the Advisor.

 

(viii)                         Advisory Agreement . The Advisory Agreement has been duly authorized, executed and delivered by the Advisor and constitutes a legal, valid and binding agreement of the Advisor enforceable against the Advisor in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general principles of equity.

 

(ix)                               No Consents; No Approvals .  No approval, authorization, consent or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency or any other third party is required in connection with the Advisor’s execution, delivery and performance of this Agreement and its consummation of the transactions contemplated herein.

 

(x)                                  Licenses .  The Advisor has all necessary licenses, authorizations, consents and approvals and has made all necessary filings required under any federal, state, local or foreign law, regulation or rule, and has obtained all necessary authorizations, consents and approvals from other persons, required in order to conduct its businesses as described in the Registration Statement, the General Disclosure Package and the Prospectus, except to the extent that any failure to have any such licenses, authorizations, consents or approvals, to make any such filings or to obtain any such authorizations, consents or approvals could not, individually or in the aggregate, reasonably be expected to have an Advisor Material Adverse Effect.  The Advisor is not in violation of, in default under, and has not received any notice regarding a possible violation, default or revocation of any such license, authorization, consent or approval or any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable

 

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to the Advisor, the effect of which could reasonably be expected to result in an Advisor Material Adverse Effect.  No such license, authorization, consent or approval contains a materially burdensome restriction that is not adequately disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.  The Advisor is not required by any applicable law to obtain accreditation or certification from any governmental agency or authority in order to provide the products and services that it currently provides or that it proposes to provide as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, except to the extent that any failure to have such accreditation or certification could not, individually or in the aggregate, reasonably be expected to have an Advisor Material Adverse Effect.

 

(xi)                               Absence of Free Writing Prospectus .  The Advisor (including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared or had prepared on its behalf or used or referred to any “free writing prospectus” as defined in Rule 405 under the 1933 Act and has not distributed any written materials in connection with the offer or sale of the Securities.

 

(xii)                            No Litigation .  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there are no actions, suits, proceedings, inquiries or investigations pending or, to the knowledge of the Advisor, threatened against the Company, any subsidiary or the Advisor or any of their respective officers and directors or to which the properties, assets or rights of any such entity are subject, at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or agency, which is required to be disclosed in the Registration Statement, or where in any such case (i) there is a reasonable possibility that such action, suit or proceeding will be determined adversely to the Advisor and (ii) if so determined adversely, could reasonably be expected to result in a judgment, decree, award or order having a Material Adverse Effect.

 

(xiii)                         Absence of Manipulation .  Neither the Advisor nor any affiliate of the Advisor has taken, nor will the Advisor or any affiliate of the Advisor take, directly or indirectly, any action which is designed, or would be expected, to cause or result in, or which constitutes, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or to result in a violation of Regulation M under the 1934 Act.

 

(xiv)                        Internal Controls .  The Advisor maintains a system of internal control in place sufficient to provide reasonable assurance that:  (i) transactions that may be effectuated by the Advisor under the Advisory Agreement are executed in accordance with its management’s general or specific authorization and (ii) access to the Company’s assets is permitted only in accordance with the internal policies, controls and procedures of the Advisor.

 

(xv)                           Insurance .  The Advisor maintains insurance (issued by insurers of recognized financial responsibility) of the types and in the amounts generally deemed adequate for its businesses and consistent with insurance coverage maintained by similar companies in similar businesses, including, but not limited to, insurance covering real and personal property owned or leased by the Advisor against theft, damage, destruction, environmental liabilities, acts of vandalism, terrorism, earthquakes, flood and all other risks customarily insured against, all of which insurance is in full force and effect.

 

(xvi)                        Labor Laws; Absence of Labor Dispute .  The Advisor has not been notified that any officer or other key person of the Company, or a significant number of employees of the Advisor and its affiliates, plan to terminate his, her or their employment.  Neither the Advisor nor, to the Advisor’s knowledge, any officer or other key person of the Company, is subject to any

 

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noncompete, nondisclosure, confidentiality, employment, consulting or similar agreement that would be violated by the present or proposed business activities of the Company or the Advisor as described in the Registration Statement, the General Disclosure Package and the Prospectus. The Advisor is not in violation of and has not received notice of any violation with respect to any federal or state law, regulation or rule relating to discrimination in the hiring, termination, promotion, employment or pay of employees, nor any applicable federal or state wages and hours law, nor any state law, regulation or rule precluding the denial of credit due to the neighborhood in which a property is situated, the violation of any of which, individually or in the aggregate, could reasonably be expected to have an Advisor Material Adverse Effect.  There are no existing or, to the knowledge of the Advisor, threatened labor disputes with the employees of the Advisor that could reasonably be expected to have, individually or in the aggregate, an Advisor Material Adverse Effect.

 

(xvii)                     No Finder’s Fee .  Except for the Underwriters’ discounts and commissions payable by the Company to the Underwriters in connection with the offering of the Securities contemplated herein or as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Advisor has not incurred any liability for any brokerage commission, finder’s fees or similar payments in connection with the offering of the Securities contemplated hereby.

 

(xviii)                  Absence of Certain Relationships .  No relationship, direct or indirect, exists between or among the Advisor, on the one hand, and the directors, officers, stockholders, customers or suppliers of the Advisor, on the other, that is required by the 1933 Act or the 1933 Act Regulations to be described in the Registration Statement, the General Disclosure Package and the Prospectus that is not so described in such documents.

 

(xix)                        Investment Advisers Act . The Advisor is not prohibited by the Investment Advisers Act of 1940, as amended, or the rules and regulations thereunder, from performing its obligations under the Advisory Agreement, as described in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(xx)                           Statistical and Market-Related Data .  Any statistical and market-related data included in the Registration Statement, the General Disclosure Package or the Prospectus are based on or derived from sources that the Advisor believes, after reasonable inquiry, to be reliable and accurate.

 

(xxi)                        Access to Resources .  The Advisor will have access to the personnel and other resources necessary for the performance of the duties of the Advisor as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(c)                                   Officer’s Certificates .  Any certificate signed by any officer of the Company or the Advisor delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty by the Company, the Operating Partnership and the Advisor to each Underwriter as to the matters covered thereby.

 

SECTION 2.                             Sale and Delivery to Underwriters; Closing .

 

(a)                                  Initial Securities .  On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company, agrees to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Company, at the price per share set forth in Schedule A , that number of Initial Securities set forth in

 

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Schedule A opposite the name of such Underwriter, plus any additional number of Initial Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof, subject, in each case, to such adjustments among the Underwriters as the Representatives in their sole discretion shall make to eliminate any sales or purchases of fractional shares.

 

(b)                                  Option Securities .  In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriters, severally and not jointly, to purchase up to an additional 862,500 shares of Common Stock, on the same basis as set forth in Section 2(a) of this Agreement, less an amount per share equal to any dividends or distributions declared by the Company and payable on the Initial Securities but not payable on the Option Securities.  The option hereby granted may be exercised for 30 days after the date hereof and may be exercised in whole or in part at any time from time to time upon notice by the Representatives to the Company setting forth the number of Option Securities as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Securities.  Any such time and date of delivery (a “ Date of Delivery ”) shall be determined by the Representatives, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time.  If the option is exercised as to all or any portion of the Option Securities, each of the Underwriters, acting severally and not jointly, will purchase that proportion of the total number of Option Securities then being purchased which the number of Initial Securities set forth in Schedule A opposite the name of such Underwriter bears to the total number of Initial Securities, subject, in each case, to such adjustments as the Representatives in their sole discretion shall make to eliminate any sales or purchases of fractional shares.

 

(c)           Payment .  Payment of the purchase price for, and delivery of certificates for, the Initial Securities shall be made at the offices of DLA Piper LLP (US), 1251 Avenue of the Americas, 27th Floor, New York, New York 10020, or at such other place as shall be agreed upon by the Representatives and the Company, at 9:00 a.m. (New York time) on the third (fourth, if the pricing occurs after 4:30 p.m. (New York time) on any given day) business day after the date hereof (unless postponed in accordance with the provisions of Section 10), or such other time not later than ten business days after such date as shall be agreed upon by the Representatives and the Company (such time and date of payment and delivery being herein called “ Closing Time ”).  In addition, in the event that any or all of the Option Securities are purchased by the Underwriters, payment of the purchase price for, and delivery of certificates for, such Option Securities shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Representatives and the Company, on each Date of Delivery as specified in the notice from the Representatives to the Company.  Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company against delivery to the Representatives for the respective accounts of the Underwriters of certificates for the Securities to be purchased by them.  It is understood that each Underwriter has authorized the Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Initial Securities and the Option Securities, if any, which it has agreed to purchase.  The Representatives, individually and not as representatives of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Initial Securities or the Option Securities, if any, to be purchased by any Underwriter whose funds have not been received by the Closing Time or the relevant Date of Delivery, as the case may be, but such payment shall not relieve such Underwriter from its obligations hereunder.

 

SECTION 3.                             Covenants of the Company and the Operating Partnership .  The Company and the Operating Partnership, jointly and severally, covenant with each Underwriter as follows:

 

(a)                                  Compliance with Securities Regulations and Commission Requests .  The Company, subject to Section 3(b), will comply with the requirements of Rule 430B, and will notify the

 

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Representatives immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective or any amendment or supplement to the Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus including any document incorporated by reference therein or for additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of any preliminary prospectus or the Prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement and (v) if the Company becomes the subject of a proceeding under Section 8A of the 1933 Act in connection with the offering of the Securities.  The Company will effect all filings required under Rule 424(b), in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and will take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus.  The Company will make every reasonable effort to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment.

 

(b)                                  Continued Compliance with Securities Laws .

 

(i)                                      The Company will comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Registration Statement, the General Disclosure Package and the Prospectus.  The Company will advise the Underwriters promptly of the happening of any event known to the Company or the Operating Partnership within the time during which a Prospectus relating to the Securities is (or, but for the exception afforded by Rule 172 of the 1933 Act Regulations, would be) required to be delivered under the 1933 Act or the 1933 Act Regulations that, in the judgment of the Company or in the reasonable opinion of the Representatives or counsel for the Underwriters, would require the Company to (i) amend the Registration Statement in order that the Registration Statement will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) amend or supplement the General Disclosure Package or the Prospectus in order that the General Disclosure Package or the Prospectus, as the case may be, will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) amend the Registration Statement or amend or supplement the General Disclosure Package or the Prospectus, as the case may be, to comply with the 1933 Act and the 1933 Act Regulations and, during such time, to promptly prepare and furnish to the Underwriters copies of the proposed amendment or supplement before filing any such amendment or supplement with the Commission, and thereafter promptly furnish at the Company’s own expense to the Underwriters and to dealers, copies in such quantities and at such locations as the Representatives may from time to time reasonably request of such amendment or supplement; if at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement (or any other registration statement relating to the Securities) or the General Disclosure Package or any preliminary prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, to promptly notify the Representatives and promptly

 

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amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

 

(ii)                                   The Company will file promptly with the Commission any amendment to the Registration Statement or any amendment or supplement to the General Disclosure Package or the Prospectus, as the case may be, that may, in the judgment of the Company or the Representatives, be required by the 1933 Act or requested by the Commission.

 

(iii)                                Prior to filing with the Commission any amendment to the Registration Statement, any amendment or supplement to the General Disclosure Package or the Prospectus or any Prospectus pursuant to Rule 424 under the 1933 Act, the Company will furnish for review a copy thereof to the Representatives and counsel for the Underwriters and not to file any such proposed amendment or supplement to which the Representatives reasonably object; the Company will give the Representatives notice of its intention to make any filing pursuant to the 1934 Act or the 1934 Act Regulations from the Applicable Time to the Closing Time and to furnish the Representatives and counsel for the Underwriters with copies of any such documents a reasonable amount of time prior to such proposed filing and not to file or use any such document to which the Representatives or counsel for the Underwriters shall reasonably object.

 

(c)                                   Delivery of Registration Statements .  The Company has furnished or will deliver to the Representatives and counsel for the Underwriters, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and signed copies of all consents and certificates of experts, and will also deliver to the Representatives, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) for each of the Underwriters.  The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

(d)                                  Delivery of Prospectuses .  The Company has delivered to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act.  The Company will furnish to each Underwriter, without charge, during the period when a prospectus relating to the Securities is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the 1933 Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request.  The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

(e)                                   Blue Sky Qualifications .  The Company will use its best efforts, in cooperation with the Underwriters, to qualify the Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representatives may designate and to maintain such qualifications in effect so long as required to complete the distribution of the Securities; provided, however, that the Company and the Operating Partnership shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

 

(f)                                    Rule 158 .  The Company will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings

 

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statement for the purposes of, and to provide to the Underwriters the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.

 

(g)                                   Use of Proceeds .  The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Registration Statement, the General Disclosure Package and the Prospectus under “Use of Proceeds.”

 

(h)                                  Listing .  The Company will use its best efforts to effect and maintain the listing of the Securities on the NYSE by the Closing Time or Date of Delivery, as applicable.

 

(i)                                      Restriction on Sale of Securities .  During a period of 45 days from the date of the Prospectus, the Company, the Operating Partnership and the Advisor will not, without the prior written consent of the Representatives, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, lend or otherwise dispose of or transfer any shares of Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock, including without limitation OP Units, or file any registration statement under the 1933 Act with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Stock, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise.  The foregoing sentence shall not apply to (A) the Securities to be sold hereunder, (B) the shares of Series B Preferred Stock to be sold in the concurrent offering disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, (C) any shares of Common Stock issued by the Company upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof and referred to in the Registration Statement, the General Disclosure Package and the Prospectus, or (D) any shares of Common Stock, OP Units, LTIP Units, dividend equivalent rights or other equity-based awards, issued or options to purchase Common Stock granted pursuant to existing employee benefit plans of the Company referred to in the Registration Statement, the General Disclosure Package and the Prospectus (including the filing of a registration statement on Form S-8 relating to such existing employee benefit plans of the Company referred to in the Registration Statement, the General Disclosure Package and the Prospectus).

 

(j)                                     Reporting Requirements .  The Company, during the period when a Prospectus relating to the Securities is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the 1933 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and 1934 Act Regulations.

 

(k)                                  Issuer Free Writing Prospectuses .  The Company agrees that, unless it obtains the prior written consent of the Representatives, it will not make any offer relating to the Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus,” or a portion thereof, required to be filed by the Company with the Commission or retained by the Company under Rule 433; provided that the Representatives will be deemed to have consented to the Issuer Free Writing Prospectuses listed on Schedule C hereto and any “road show that is a written communication” within the meaning of Rule 433(d)(8)(i) that has been reviewed by the Representatives.  The Company represents that it has treated or agrees that it will treat each such free writing prospectus consented to, or deemed consented to, by the Representatives as an “issuer free writing prospectus,” as defined in Rule 433, and that it has complied and will comply with the applicable requirements of Rule 433 with respect thereto, including timely filing with the Commission where required, legending and record keeping.  If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement, any preliminary prospectus

 

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or the Prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Representatives and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

 

(l)                                      Absence of Manipulation .  Except as contemplated herein or in the General Disclosure Package and the Prospectus, each of the Company, the Operating Partnership and the Advisor will not take, directly or indirectly, any action which is designed, or would be reasonably expected, to cause or result in, or which constitutes, the stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Securities.

 

(m)                              Qualification and Taxation as a REIT .  The Company will use its best efforts to meet the requirements for qualification and taxation as a REIT under the Code for its taxable year ending December 31, 2017, and the Company will use its best efforts to continue to qualify for taxation as a REIT under the Code in subsequent taxable years and will not take any action to revoke or otherwise terminate the Company’s REIT election, unless the Company’s board of directors determines in good faith that it is no longer in the best interests of the Company and its stockholders to be so qualified.

 

(n)                                  Sarbanes-Oxley Act . The Company will comply in all material respects with all applicable provisions of the Sarbanes-Oxley Act that are in effect and applicable to the Company.

 

(o)                                  Notification of Material Events .  The Company, during the period when the Prospectus is (or but for the exemption in Rule 172 would be) required to be delivered under the 1933 Act or the 1934 Act, shall notify the Representatives of the occurrence of any material events respecting its (including those of the Operating Partnership) activities, affairs or condition, financial or otherwise, if, but only if, as a result of any such event it is necessary, in the opinion of counsel, to amend or supplement the Prospectus in order to make the Prospectus not misleading in the light of the circumstances existing at the time it is (or but for the exemption in Rule 172 would be) delivered to a purchaser, and the Company will forthwith supply such information as shall be necessary in the opinion of counsel to the Company and the Underwriters for the Company to prepare any necessary amendment or supplement to the Prospectus so that, as so amended or supplemented, the Prospectus will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is (or but for the exemption in Rule 172 would be) delivered to a purchaser, not misleading.

 

(p)          Emerging Growth Company Status . The Company will promptly notify the Representatives if the Company ceases to be an Emerging Growth Company at any time prior to the later of (i) completion of the distribution of the Securities within the meaning of the 1933 Act and (ii) completion of the 90-day restricted period referred to in Section 3(i).

 

SECTION 4.                             Payment of Expenses .

 

(a)          Expenses .  The Company agrees to pay all costs and expenses incident to the performance of its obligations under this Agreement, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, including expenses, fees and taxes in connection with: (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters and to dealers of copies of each preliminary prospectus, each Issuer Free Writing Prospectus and the Prospectus and any amendments or supplements thereto (including the costs of mailing and shipment), (iii) the preparation, issuance and delivery of the certificates for the Securities to the

 

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Underwriters, including any stock or other transfer taxes or duties payable upon the sale of the Securities to the Underwriters, (iv) the printing of this Agreement and any dealer agreements and furnishing of copies of each to the Underwriters and to dealers (including costs of mailing and shipment), (v) the fees and disbursements of the Company’s counsel, accountants and other advisors, (vi) the qualification of the Securities for offering and sale under state laws that the Company and the Representatives have mutually agreed are appropriate and the determination of their eligibility for investment under state law as aforesaid, and the printing and furnishing of copies of any blue sky surveys or legal investment surveys to the Underwriters and to dealers, (vii) the fees and expenses of any transfer agent or registrar for the Securities and miscellaneous expenses referred to in the Registration Statement, (viii) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the Securities, (ix) the filing fees incident to the review by FINRA of the terms of the sale of the Securities,  (x) the fees and expenses incurred in connection with the listing of the Securities on the NYSE, and (xi) the performance of the Company’s and the Operating Partnership’s other obligations hereunder. Upon request of the Representatives, the Company will provide funds in advance for filing fees.

 

(b)                                  Termination of Agreement .  If this Agreement is terminated by the Representatives in accordance with the provisions of Section 5 or Section 9(a)(i) or (iii) hereof, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters.

 

SECTION 5.                             Conditions of Underwriters’ Obligations .  The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Company, the Operating Partnership and the Advisor contained herein or in certificates of any officer of the Company, the Operating Partnership or the Advisor or any of their subsidiaries delivered pursuant to the provisions hereof, to the performance by the Company, the Operating Partnership and the Advisor of their respective covenants and other obligations hereunder, and to the following further conditions:

 

(a)                                  Effectiveness of Registration Statement .  The Registration Statement has become effective and at the Closing Time no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the 1933 Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company’s knowledge, contemplated; and the Company has complied with each request (if any) from the Commission for additional information.

 

(b)                                  Opinion of Counsel for Company, the Operating Partnership and the Advisor .  At the Closing Time, the Representatives shall have received the favorable opinion and negative assurance statement, dated the Closing Time, of Andrews Kurth Kenyon LLP, counsel for the Company, the Operating Partnership and the Advisor, together with signed or reproduced copies of such letter for each of the other Underwriters, substantially in the form attached as Exhibit B hereto.

 

(c)                                   Opinion of Tax Counsel for Company and the Operating Partnership .  At the Closing Time, the Representatives shall have received the favorable opinion, dated the Closing Time, of Andrews Kurth Kenyon LLP, tax counsel for the Company and the Operating Partnership, together with signed or reproduced copies of such letter for each of the other Underwriters, substantially in the form attached as Exhibit C hereto.

 

(d)                                  Opinion of In-House Counsel for the Company, the Operating Partnership and the Advisor.  At the Closing Time, the Representatives shall have received the favorable opinion, dated the Closing Time, of in-house counsel for the Company, the Operating Partnership and the Advisor, together

 

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with signed or reproduced copies of such letter for each of the other Underwriters, substantially in the form attached as Exhibit D hereto.

 

(e)                                   Opinion of Maryland Counsel for Company and the Operating Partnership.  At the Closing Time, the Representatives shall have received the favorable opinion, dated the Closing Time, of Hogan Lovells US LLP, Maryland counsel for the Company and the Operating Partnership, together with signed or reproduced copies of such letter for each of the other Underwriters, substantially in the form attached as Exhibit E hereto.

 

(f)                                    Opinion of Counsel for Underwriters .  At the Closing Time, the Representatives shall have received the favorable opinion, dated the Closing Time, of DLA Piper LLP (US), counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters, with respect to such matters as the Underwriters may reasonably request.

 

(g)                                   Officers’ Certificates .  At the Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the General Disclosure Package or the Prospectus, any Material Adverse Effect, and the Representatives shall have received a certificate of each of the Chief Executive Officer, President or Chief Operating Officer and the Chief Financial Officer of the Company, dated the Closing Time, to the effect that (i) there has been no such Material Adverse Effect, (ii) the representations and warranties in Section 1(a) of this Agreement are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) each of the Company and the Operating Partnership has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement under the 1933 Act has been issued, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to their knowledge, contemplated. At the Closing Time, the Representatives shall have received a certificate of each of the Chief Executive Officer, President or Chief Operating Officer and the Chief Financial Officer of the Advisor, dated the Closing Time, to the effect that (i) there has not been a Material Adverse Effect, (ii) the representations and warranties in Section 1(b) of this Agreement are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Advisor has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement under the 1933 Act has been issued, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the knowledge of the Advisor, contemplated.

 

(h)                                  Ernst & Young LLP Comfort Letter .  At the time of the execution of this Agreement, the Representatives shall have received from Ernst & Young LLP a letter, dated such date, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters, relating to the combined consolidated financial statements, including pro forma financial statements (if any), of the Company and its subsidiaries, and containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(i)                                      Bring-down Ernst & Young LLP Comfort Letter .  At the Closing Time, the Representatives shall have received from Ernst & Young LLP a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (h) of this Section, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time.

 

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(j)                                     BDO USA, LLP Comfort Letter .  At the time of the execution of this Agreement, the Representatives shall have received from BDO USA, LLP a letter, dated such date, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters, relating to the combined consolidated financial statements, including pro forma financial statements (if any), of the Company and its subsidiaries, and containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(k)                                  Bring-down BDO USA, LLP Comfort Letter .  At the Closing Time, the Representatives shall have received from BDO USA, LLP a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (j) of this Section, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time.

 

(l)                                      Peterson Sullivan LLP Comfort Letter . At the time of the execution of this Agreement, the Representatives shall have received from Peterson Sullivan LLP a letter, dated such date, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters, relating to the financial statements of Yountville Investors, LLC for the acquisition of the Bardessono Inn & Spa in Yountville, California, and containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the General Disclosure Package and the Prospectus.

 

(m)                              Chief Financial Officer’s Certificate .  At the time of execution of this Agreement, the Representatives shall have received a certificate of the Chief Financial Officer of the Company, dated as of such date, in a form reasonably satisfactory to the Representatives, together with signed or reproduced copies of such certificate for each of the other Underwriters. At the Closing Time, the Representatives shall have received a certificate, dated as of the Closing Time, of the Chief Financial Officer of the Company confirming that the certificate delivered by the Company at the time of execution of this Agreement pursuant to the prior sentence of this Section 5(m) hereof remains true and correct as of the Date of Delivery.

 

(n)                                  Approval of Listing .  At the Closing Time, the Securities shall have been approved for listing on the NYSE, subject only to official notice of issuance.

 

(o)                                  No Objection .  FINRA shall not have raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements relating to the offering of the Securities.

 

(p)                                  Lock-up Agreements .  At the date of this Agreement, the Representatives shall have received an agreement in the form of Exhibit A hereto signed by the persons listed on Schedule D hereto (by power of attorney or otherwise).

 

(q)                                  No Amendments or Supplements .  No amendment or supplement to the Registration Statement, the Prospectus, any preliminary prospectus or any Issuer Free Writing Prospectus shall be filed to which the Underwriters shall have reasonably objected in writing.

 

(r)                                     No Downgrade .  Subsequent to the execution and delivery of this Agreement and prior to the Closing Time, there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the securities of the Company, the

 

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Operating Partnership or any of their subsidiaries by any “nationally recognized statistical rating organization,” as such term is defined for purposes of Section 3(a)(62) of the 1934 Act.

 

(s)                                    Conditions to Purchase of Option Securities .  In the event that the Underwriters exercise their option provided in Section 2(b) hereof to purchase all or any portion of the Option Securities, the representations and warranties of the Company, the Operating Partnership and the Advisor contained herein and the statements in any certificates furnished by the Company and the Advisor and any of their subsidiaries hereunder shall be true and correct as of each Date of Delivery and, at the relevant Date of Delivery, the Representatives shall have received:

 

(i)                                      Officers’ Certificates .  A certificate, dated such Date of Delivery, of each of the Chief Executive Officer, President or Chief Operating Officer and the Chief Financial Officer of the Company, confirming that the certificate delivered at the Closing Time pursuant to Section 5(g) hereof remains true and correct as of such Date of Delivery. A certificate, dated such Date of Delivery, of each of the Chief Executive Officer, President or Chief Operating Officer and the Chief Financial Officer of the Advisor, confirming that the certificate delivered at the Closing Time pursuant to Section 5(g) hereof remains true and correct as of such Date of Delivery.

 

(ii)                                   Opinion of Counsel for Company, the Operating Partnership and the Advisor .  The favorable opinion and negative assurance statement of Andrews Kurth Kenyon LLP, counsel for the Company, the Operating Partnership and the Advisor, in form and substance reasonably satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(b) hereof.

 

(iii)                                Opinion of Tax Counsel for Company and the Operating Partnership .  The favorable opinion of Andrews Kurth Kenyon LLP, tax counsel for the Company and the Operating Partnership, in form and substance satisfactory reasonably to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(c) hereof.

 

(iv)                               Opinion of In-House Counsel for the Company, the Operating Partnership and the Advisor . The favorable opinion of in-house counsel for the Company, the Operating Partnership and the Advisor, in form and substance reasonably satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(d) hereof.

 

(vi)                               Opinion of Maryland Counsel for Company and the Operating Partnership . The favorable opinion of Hogan Lovells US LLP, Maryland counsel for the Company and the Operating Partnership, in form and substance reasonably satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(e) hereof.

 

(vii)                            Opinion of Counsel for Underwriters .  The favorable opinion of DLA Piper LLP (US), counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(f) hereof.

 

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(viii)                         Bring-down Ernst & Young LLP Comfort Letter .  A letter from Ernst & Young LLP, in form and substance satisfactory to the Representatives and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representatives pursuant to Section 5(i) hereof, except that the “specified date” in the letter furnished pursuant to this paragraph shall be a date not more than three business days prior to such Date of Delivery.

 

(ix)                               Bring-down BDO USA, LLP Comfort Letter .  A letter from BDO USA, LLP, in form and substance satisfactory to the Representatives and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representatives pursuant to Section 5(k) hereof, except that the “specified date” in the letter furnished pursuant to this paragraph shall be a date not more than three business days prior to such Date of Delivery.

 

(x)                                  Chief Financial Officer’s Certificate .  A certificate of the Chief Financial Officer of the Company, dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representatives pursuant to Section 5(m) hereof.

 

(t)                                     Additional Documents .  At the Closing Time and at each Date of Delivery (if any) counsel for the Underwriters shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Securities as herein contemplated shall be reasonably satisfactory in form and substance to the Representatives and counsel for the Underwriters.

 

(u)          Termination of Agreement .  If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any condition to the purchase of Option Securities on a Date of Delivery which is after the Closing Time, the obligations of the several Underwriters to purchase the relevant Option Securities, may be terminated by the Representatives by notice to the Company at any time at or prior to Closing Time or such Date of Delivery, as the case may be, and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 6, 7, 8, 11, 12, 14, 15, 16, 17 and 18 shall survive any such termination and remain in full force and effect.

 

SECTION 6.                             Indemnification .

 

(a)                                  Indemnification of Underwriters .  The Company, the Operating Partnership and the Advisor agree, jointly and severally, to indemnify and hold harmless each Underwriter, its affiliates (as such term is defined in Rule 501(b) under the 1933 Act (each, an “ Affiliate ”)), its selling agents and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

 

(i)                                      against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including any information deemed to be a part thereof pursuant to Rule 430B, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in (A) any preliminary prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package or the Prospectus (or any amendment or supplement thereto), or (B) in any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the offering of the Securities (“ Marketing Materials ”), including

 

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any road show or investor presentation made to investors by the Company (whether in person or electronically),  or the omission or alleged omission in any preliminary prospectus, Issuer Free Writing Prospectus, the General Disclosure Package, the Prospectus or in Marketing Materials of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(ii)                                   against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Company;

 

(iii)                                against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Representatives), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above;

 

provided , however , that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in the Registration Statement (or any amendment thereto), including any information deemed to be a part thereof pursuant to Rule 430B, or any preliminary prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with the Underwriter Information.

 

(b)                                  Indemnification of Company, the Advisor and Directors and Officers .  Each Underwriter severally agrees to indemnify and hold harmless the Company, the Operating Partnership and the Advisor, each of their respective directors, each of the Company’s officers who signed the Registration Statement, and each person, if any, who controls the Company or the Advisor within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including any information deemed to be a part thereof pursuant to Rule 430B, or any preliminary prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with the Underwriter Information.

 

(c)                                   Actions against Parties; Notification .  Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced (by the forfeiture of substantial rights and defenses) as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement.  In the case of parties indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by the Representatives, and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Company.  An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party.  In no event shall the indemnifying parties be liable for fees and expenses of more than

 

33

 

one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances.  No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

(d)                                  Settlement without Consent if Failure to Reimburse .  If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

 

SECTION 7.                             Contribution .  If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, the Operating Partnership and the Advisor, on the one hand, and the Underwriters, on the other hand, from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, the Operating Partnership and the Advisor, on the one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions, which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

 

The relative benefits received by the Company, the Operating Partnership and the Advisor, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company, the Operating Partnership and the Advisor, on the one hand, and the total underwriting discount received by the Underwriters, on the other hand, in each case as set forth on the cover of the Prospectus, bear to the aggregate public offering price of the Securities as set forth on the cover of the Prospectus.

 

The relative fault of the Company, the Operating Partnership and the Advisor, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, the Operating Partnership or the Advisor or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

34

 

The Company, the Operating Partnership, the Advisor and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7.  The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

 

Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission.

 

No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Underwriter’s Affiliates and selling agents shall have the same rights to contribution as such Underwriter, and each director of the Company and the Advisor, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company, the Operating Partnership or the Advisor within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company, the Operating Partnership or the Advisor.  The Underwriters’ respective obligations to contribute pursuant to this Section 7 are several in proportion to the number of Initial Securities set forth opposite their respective names in Schedule A hereto and not joint. The Company’s, the Operating Partnership’s and the Advisor’s respective obligations to contribute pursuant to this Section 7 are joint and several.

 

The provisions of this Section shall not affect any agreement among the Company and the Operating Partnership with respect to contribution.

 

SECTION 8.                             Representations, Warranties and Agreements to Survive .  All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or the Advisor or any of their subsidiaries or the Operating Partnership submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its officers or directors, or the Company, the Advisor, any person controlling the Company, the Operating Partnership or the Advisor, or their officers and directors and (ii) delivery of and payment for the Securities.

 

SECTION 9.                             Termination of Agreement .

 

(a)                                  Termination .  The Representatives may terminate this Agreement, by notice to the Company, at any time at or prior to the Closing Time (i) if there has been, in the judgment of the Representatives, since the time of execution of this Agreement or since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package or the Prospectus, any Material Adverse Effect, or (ii) if there has occurred any material adverse change in the financial markets

 

35

 

in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representatives, impracticable or inadvisable to proceed with the completion of the offering or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended or materially limited by the Commission or the NYSE, or (iv) if trading generally on the NYSE MKT or the NYSE or in the Nasdaq Global Market has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by order of the Commission, FINRA or any other governmental authority, or (v) a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States or with respect to Clearstream or Euroclear systems in Europe, or (vi) if a banking moratorium has been declared by either Federal or New York authorities.

 

(b)                                  Liabilities .  If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6, 7, 8, 11, 12, 14, 15, 16, 17 and 18 shall survive such termination and remain in full force and effect.

 

SECTION 10.                      Default by One or More of the Underwriters .  If one or more of the Underwriters shall fail at the Closing Time or a Date of Delivery to purchase the Securities which it or they are obligated to purchase under this Agreement (the “ Defaulted Securities ”), the Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representatives shall not have completed such arrangements within such 24-hour period, then:

 

(i)                                      if the number of Defaulted Securities does not exceed 10% of the number of Securities to be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or

 

(ii)                                   if the number of Defaulted Securities exceeds 10% of the number of Securities to be purchased on such date, the Representatives may terminate this Agreement or, with respect to any Date of Delivery which occurs after the Closing Time, the obligation of the Underwriters to purchase, and the Company to sell, the Option Securities to be purchased and sold on such Date of Delivery, without liability on the part of any non-defaulting Underwriter.

 

No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default.

 

In the event of any such default which does not result in a termination of this Agreement or, in the case of a Date of Delivery which is after the Closing Time, which does not result in a termination of the obligation of the Underwriters to purchase and the Company to sell the relevant Option Securities, as the case may be, either the (i) Representatives or (ii) the Company shall have the right to postpone Closing Time or the relevant Date of Delivery, as the case may be, for a period not exceeding seven days in order to effect any required changes in the Registration Statement, the General Disclosure Package or the Prospectus or in any other documents or arrangements.  As used herein, the term “Underwriter” includes any person substituted for an Underwriter under this Section 10.

 

36

 

SECTION 11.                      Notices .  All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication.  Notices to the Underwriters shall be directed to the Representatives at UBS Securities LLC, Prospectus Department, 1285 Avenue of the Americas, New York, New York 10019 (facsimile (203) 719-0495) and Morgan Stanley & Co. LLC at 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department; and, with a copy to (which shall not constitute notice) DLA Piper LLP (US), 1251 Avenue of the Americas, 27th Floor, New York, New York 10020, attention of Kerry E. Johnson (facsimile (212) 335-4501); notices to the Company, the Operating Partnership and the Advisor shall be directed to them at Ashford Hospitality Prime, Inc., 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254, attention of David Brooks (facsimile (972) 490-9605), with a copy to (which shall not constitute notice) Andrews Kurth Kenyon LLP, 600 Travis, Suite 4200, Houston, Texas 77002, attention of George Vlahakos (facsimile (713) 220-4285).

 

SECTION 12.                      No Advisory or Fiduciary Relationship .  The Company, its subsidiaries and the Advisor acknowledge and agree that (a) the purchase and sale of the Securities pursuant to this Agreement, including the determination of the public offering price of the Securities and any related discounts and commissions, is an arm’s-length commercial transaction between the Company, its subsidiaries and the Advisor, on the one hand, and the several Underwriters, on the other hand, (b) in connection with the offering of the Securities and the process leading thereto, each Underwriter is and has been acting solely as a principal and is not the agent or fiduciary of the Company, any of its subsidiaries, the Advisor or their respective stockholders, equity interest holders, creditors, employees or any other party, (c) no Underwriter has assumed or will assume an advisory or fiduciary responsibility in favor of the Company, any of its subsidiaries or the Advisor with respect to the offering of the Securities or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company, any of its subsidiaries or the Advisor on other matters) and no Underwriter has any obligation to the Company, any of its subsidiaries or the Advisor with respect to the offering of the Securities except the obligations expressly set forth in this Agreement, (d) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of each of the Company, its subsidiaries and the Advisor, and (e) none of the Underwriters or legal counsel for the Underwriters has provided any legal, accounting, regulatory or tax advice to the Company, any of its subsidiaries or the Advisor with respect to the offering of the Securities and the Company, its subsidiaries and the Advisor have consulted their own respective legal, accounting, regulatory and tax advisors to the extent they deemed appropriate.

 

SECTION 13.                      Parties .  This Agreement shall each inure to the benefit of and be binding upon the Underwriters, the Company, the Operating Partnership and the Advisor and their respective successors.  Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters, the Company, the Operating Partnership and the Advisor and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained.  This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters, the Company, the Operating Partnership and the Advisor and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation.  No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase.

 

SECTION 14.                      Trial by Jury .  The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates), the Operating Partnership, the Advisor and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any

 

37

 

and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

SECTION 15.                      GOVERNING LAW .  THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK.

 

SECTION 16.                      TIME . TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

 

SECTION 17.                      Counterparts .  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.

 

SECTION 18.                      Effect of Headings .  The Section headings herein are for convenience only and shall not affect the construction hereof.

 

[ Signature Page Follows .]

 

38

 

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the Underwriters, the Company, the Operating Partnership and the Advisor in accordance with its terms.

 

		Very truly yours,
		ASHFORD HOSPITALITY PRIME, INC.
		By:	/s/ David A. Brooks
			David A. Brooks, Chief Operating Officer
		ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP
		By:	Ashford Prime OP General Partner LLC,
			as the sole general partner
		By:	Ashford Hospitality Prime, Inc.,
			as the sole managing member
		By:	/s/ David A. Brooks
			David A. Brooks, Chief Operating Officer
		ASHFORD HOSPITALITY ADVISORS LLC
		By:	/s/ David A. Brooks
			David A. Brooks, Chief Operating Officer

 

[Signature Page to Underwriting Agreement (March 2017)]

 

 

CONFIRMED AND ACCEPTED,
	as of the date first above written:
UBS SECURITIES LLC
By:	/s/ Asad Kazim
Name:	Asad Kazim
Title:	Managing Director
By:	/s/ Whitney Mikell
Name:	Whitney Mikell
Title:	Associate Director
MORGAN STANLEY & CO. LLC
By:	/s/ Jon Sierant
Name:	Jon Sierant
Title:	Executive Director

 

For themselves and as Representatives of the other Underwriters named in Schedule A hereto.

 

[Signature Page to Underwriting Agreement (March 2017)]

 

 

SCHEDULE A

 

1.                                       The initial public offering price per share for the Securities shall be $12.15.

 

2.                                       The purchase price per share for the Securities to be paid by the several Underwriters shall be $11.60325, being an amount equal to the initial public offering price set forth above less $0.54675 per share, subject to adjustment in accordance with Section 2(b) for dividends or distributions declared by the Company and payable on the Initial Securities but not payable on the Option Securities.

 

Name of Underwriter		Number of Initial Securities
UBS Securities LLC		2,012,525
Morgan Stanley & Co. LLC		2,012,525
Robert W. Baird & Co. Incorporated		970,543
FBR Capital Markets & Co.		168,467
JMP Securities LLC		166,943
Janney Montgomery Scott LLC		153,219
Canaccord Genuity Inc.		132,889
Credit Agricole Securities (USA) Inc.		132,889
Total		5,750,000

 

Sch A- 1

 

SCHEDULE B

 

1.                                       The Company is selling 5,750,000 shares of Common Stock.

 

2.                                       The Company has granted an option to the Underwriters, severally and not jointly, to purchase up to an additional 862,500 shares of Common Stock.

 

3.                                       The initial public offering price per share for the Securities shall be $12.15.

 

Sch B- 1

 

SCHEDULE C

 

Free Writing Prospectuses

 

None.

 

Sch C- 1

 

SCHEDULE D

 

List of Persons and Entities Subject to Lock-Up

 

All directors, executive officers and certain other existing security holders:

 

1.               Richard J. Stockton

 

2.               David A. Brooks

 

3.               Douglas A. Kessler

 

4.               Deric S. Eubanks

 

5.               Mark L. Nunneley

 

6.               Jeremy J. Welter

 

7.               J. Robinson Hays

 

8.               Monty J. Bennett

 

9.               Stefani D. Carter

 

10.        Kenneth H. Fearn

 

11.        Curtis B. McWilliams

 

12.        W. Michael Murphy

 

13.        Matthew D. Rinaldi

 

14.        Andrew L. Strong

 

15.        Ashford Financial Corporation

 

Sch D- 1

 

SCHEDULE E

 

Significant Subsidiaries

 

AHP SMA GP, LLC

 

AHP SMA, LP

 

Ashford Chicago GP LLC

 

Ashford Chicago Junior Mezz LLC

 

Ashford Chicago LP

 

Ashford Chicago Senior Mezz LLC

 

Ashford HHC III LLC

 

Ashford HHC Partners III LP

 

Ashford Hospitality Prime Limited Partnership

 

Ashford Hospitality Prime, Inc.

 

Ashford Philadelphia Annex GP LLC

 

Ashford Philadelphia Annex LP

 

Ashford Pier House GP LLC

 

Ashford Pier House LP

 

Ashford Pier House Mezz A LLC

 

Ashford Pier House Mezz B LLC

 

Ashford Plano-M LP

 

Ashford Prime OP General Partner LLC

 

Ashford Prime OP Limited Partner LLC

 

Ashford Prime TRS Corporation

 

Ashford San Francisco II LP

 

Ashford Sapphire III GP LLC

 

Ashford Sapphire VII GP LLC

 

Ashford Seattle Downtown LP

 

Sch E- 1

 

Ashford Seattle Waterfront LP

 

Ashford SF GP LLC

 

Ashford Tampa International Hotel, LP

 

Ashford Thomas LLC

 

Ashford TRS Chicago II LLC

 

Ashford TRS Chicago Junior Mezz LLC

 

Ashford TRS Chicago Senior Mezz LLC

 

Ashford TRS Philadelphia Annex LLC

 

Ashford TRS Pier House LLC

 

Ashford TRS Pier House Mezz A LLC

 

Ashford TRS Pier House Mezz B LLC

 

Ashford TRS Sapphire III LLC

 

Ashford TRS Sapphire VII LLC

 

Ashford TRS SF LLC

 

CHH Capital Hotel GP LLC

 

CHH Capital Hotel Partners LP

 

CHH Capital Tenant Corp.

 

CHH III Tenant Parent Corp.

 

CHH Torrey Pines Hotel GP LLC

 

CHH Torrey Pines Hotel Partners LP

 

CHH Torrey Pines Tenant Corp.

 

RC Hotels (Virgin Islands), Inc.

 

Sch E- 2

 

Exhibit A

 

FORM OF LOCK-UP AGREEMENT

 

, 2017

 

UBS Securities LLC

Morgan Stanley & Co. LLC

 

c/o UBS Securities LLC

1285 Avenue of the Americas

New York, New York 10019

 

c/o Morgan Stanley & Co. LLC

1585 Broadway

New York, New York 10036

 

as Representatives of the several Underwriters to be

named in the within-mentioned Underwriting Agreement

 

Re:                              Proposed Public Offering by Ashford Hospitality Prime, Inc.

 

Dear Sirs:

 

The undersigned, a stockholder, officer and/or director of Ashford Hospitality Prime, Inc., a Maryland corporation (the “ Company ”), and/or holder of units (“ OP Units ”) in Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership and the Company’s operating partnership (the “ Operating Partnership ”), understands that UBS Securities LLC and Morgan Stanley & Co. LLC (the “ Representatives ”) propose to enter into an Underwriting Agreement (the “ Underwriting Agreement ”) with the Company and the Operating Partnership providing for the public offering (the “ Offering ”) of shares (the “ Securities ”) of the Company’s common stock, par value $0.01 per share (the “ Common Stock ”).  In recognition of the benefit that such an offering will confer upon the undersigned as a stockholder, officer and/or director of the Company and/or holder of OP Units, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with each underwriter to be named in the Underwriting Agreement that, during the period beginning on the date hereof and ending on the date that is 45 days from the date of the Underwriting Agreement (subject to extensions as discussed below), the undersigned will not, without the prior written consent of the Representatives, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, lend or otherwise dispose of or transfer any shares of the Company’s Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock (including, without limitation, OP Units), whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition (collectively, the “ Lock-Up Securities ”), or exercise any right with respect to the registration of any of the Lock-Up Securities, or file or cause to be filed any registration statement in connection therewith, under the Securities Act of 1933, as amended, or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise.

 

Ex A- 1

 

Notwithstanding the foregoing, and subject to the conditions below, the undersigned may transfer the Lock-Up Securities as follows without the prior written consent of the Representatives, provided that (1) the Representatives receive a signed lock-up agreement for the balance of the lock-up period from each donee, trustee, distributee, or transferee, as the case may be, (2) any such transfer shall not involve a disposition for value, (3) such transfers are not required to be reported with the Securities and Exchange Commission on Form 4 in accordance with Section 16 of the Securities Exchange Act of 1934, as amended, and (4) the undersigned does not otherwise voluntarily effect any public filing or report regarding such transfers:

 

(i)                                      as a bona fide gift or gifts; or

 

(ii)                                   to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned (for purposes of this lock-up agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin); or

 

(iii)                                as a distribution to limited partners, members or stockholders of the undersigned; or

 

(iv)                               to the undersigned’s affiliates or to any investment fund or other entity controlled or managed by the undersigned.

 

Furthermore, the undersigned may sell shares of Common Stock of the Company purchased by the undersigned on the open market following the Offering if and only if (i) such sales are not required to be reported in any public report or filing with the Securities and Exchange Commission, or otherwise and (ii) the undersigned does not otherwise voluntarily effect any public filing or report regarding such sales.

 

[ NTD: include the following in the agreements with executive officers previously identified to the Representatives: The foregoing restrictions shall not apply to a sale of Lock-Up Securities pursuant to a written trading plan in effect before the date hereof that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) of the Securities Exchange Act of 1934, as amended.]

 

[ NTD: include the following in the agreements with executive officers previously identified to the Representatives: The foregoing restrictions shall not apply to the surrender of Lock-Up Securities to the Company solely for payment of tax withholding obligations in connection with the vesting of restricted shares of Common Stock held by the undersigned.]

 

The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s (or any other applicable) transfer agent and registrar against the transfer of the Lock-Up Securities except in compliance with the foregoing restrictions.

 

[SIGNATURE PAGE FOLLOWS.]

 

Ex A- 2

 

 

Ex A- 3

 

Exhibit B

 

FORM OF OPINION AND NEGATIVE ASSURANCE LETTER OF COUNSEL FOR THE COMPANY AND THE SUBSIDIARIES

 

1.                           The Company owns of record all of the outstanding membership interests in OP GP, free and clear of all liens in respect of which a financing statement under the Uniform Commercial Code of the State of Maryland naming the Company is on file in the office of the Secretary of State of the State of Maryland.  All of such issued and outstanding membership interests of OP GP have been duly authorized and validly issued and are fully paid and non-assessable (except to the extent set forth in Sections 18-607 and 18-804 of the Delaware LLC Act).

 

2.                           The Company owns of record all of the outstanding membership interests in OP LP, free and clear of all liens in respect of which a financing statement under the Uniform Commercial Code of the State of Maryland naming the Company is on file in the office of the Secretary of State of the State of Maryland.  All of the issued and outstanding membership interests of OP LP have been duly authorized and validly issued and are fully paid and non-assessable (except to the extent set forth in Sections 18-607 and 18-804 of the Delaware LLC Act).

 

3.                           OP LP owns [•]% of the limited partner interests in the Operating Partnership (such units, the “ Ashford OP Units ”) free and clear of all liens in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming OP LP is on file in the office of the Secretary of State of the State of Delaware.  The Ashford OP Units have been duly authorized and validly issued and are fully paid and non-assessable (except to the extent set forth in Section 17-303, 17-607 and 17-804 of the DRULPA).

 

4.                           OP GP owns a noneconomic general partner interest in the Operating Partnership free and clear of all liens in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming OP GP is on file in the office of the Secretary of State of the State of Delaware.   Such noneconomic general partner interest has been duly authorized and validly issued.

 

5.                           The Common Units underlying the Securities have been duly authorized and, when issued and delivered by the Operating Partnership in accordance with the OP Partnership Agreement against payment therefor of the consideration set forth therein, will be validly issued and non-assessable (except to the extent set forth in Section 17-303, 17-607 and 17-804 of the DRULPA).  The issuance of the Common Units underlying the Securities is not subject to preemptive rights of any securityholder of the Operating Partnership pursuant to any Applicable Agreement.  The holders of outstanding Common Units in the Operating Partnership are not entitled pursuant to the DRULPA or the OP Partnership Agreement to preemptive or other rights to subscribe for (i) the Securities, or (ii) the Common Units underlying the Securities.

 

6.                           To the best of our knowledge, except (i) as disclosed in the Disclosure Package and the Prospectus, (ii) as set forth in the OP Organizational Documents, the Charter, the OP GP Agreement or the OP LP Agreement or (iii) with respect to the issued and outstanding common units and long-term incentive partnership units in the Operating Partnership held by partners other than the Company, which are redeemable for cash or, at the option of the Company, into common stock pursuant to the OP Partnership Agreement, there are no outstanding (a) securities or obligations of the Company, the Operating Partnership, OP GP or the OP LP convertible into or exchangeable for any capital stock or partnership interests of the Company or the Operating Partnership, respectively, (b) warrants, rights or options to subscribe for or purchase from the

 

Ex B- 1

 

Company, the Operating Partnership, OP GP or OP LP any capital stock or partnership interests, or any securities convertible or exchangeable into capital stock or partnership interests of the Company, the Operating Partnership, OP GP or OP LP, respectively, or (c) obligations of the Company, the Operating Partnership. OP GP or OP LP to issue any shares of capital stock, partnership interests, membership interests or other equity interests, as applicable, or any convertible or exchangeable securities or obligation, or any warrants, rights or options.

 

7.                           Each of OP GP, OP LP, the Operating Partnership and the Advisor is validly existing and of good standing as a limited partnership or limited liability company, as the case may be, under the laws of the State of Delaware, and has full limited partnership or limited liability company power and authority, as applicable, to own its respective properties and to conduct its respective businesses as described in the Disclosure Package and the Prospectus and, with respect to the Operating Partnership and the Advisor, to consummate the transactions described in the Underwriting Agreement.

 

8.                           Each of the Persons listed on Schedule I hereto is in good standing in each jurisdiction set forth opposite its name therein.

 

9.                           None of (i) the execution and delivery by the Company, the Advisor or the Operating Partnership of the Underwriting Agreement, (ii) the consummation by the Company of the issuance and sale of the Securities pursuant to the Underwriting Agreement, and (iii) the issuance of the Common Units in accordance with the OP Partnership Agreement, (A) constituted, constitutes or will constitute a violation of the Advisor of the Advisor Organizational Documents or a violation of the Operating Partnership of the OP Organizational Documents, (B) constituted, constitutes or will constitute a breach or violation of, or a default (or an event which, with notice or lapse of time or both, would constitute such a default), under any of the Advisor Organizational Documents or the OP Organizational Documents, (C) resulted, results or will result in any violation of (1) applicable laws of the State of New York, (2) applicable laws of the United States of America, (3) the DRULPA or (4) the Delaware LLC Act, or (D) resulted, results or will result in the contravention of any Applicable Order.

 

10.                    The execution, delivery and performance of the Advisory Agreement by the Operating Partnership and the Advisor was duly authorized by all necessary limited partnership or limited liability company action of such party, as applicable; and the Advisory Agreement constitutes a valid and binding obligation of the Company, the Operating Partnership and the Advisor, enforceable against the Company, the Operating Partnership and the Advisor in accordance with its terms.

 

11.                    The Underwriting Agreement has been duly authorized, executed and delivered by the Operating Partnership and the Advisor.

 

12.                    No Governmental Approval or Filing, which has not been obtained or made and is not in full force and effect, is required to authorize, or is required for, (i) the execution and delivery by the Company, the Operating Partnership or the Advisor of the Underwriting Agreement, (ii) the consummation by the Company of the issuance and sale of the Securities pursuant to the Underwriting Agreement, and (iii) the issuance of the Common Units.  As used in this paragraph, “ Governmental Approval or Filing ” means any consent, approval, license, authorization or validation of, or filing, recording or registration with, any executive, legislative, judicial, administrative or regulatory body of the State of Texas, the State of New York, the State of Delaware or the United States of America, pursuant to (i) applicable laws of the State of Texas,

 

Ex B- 2

 

(ii) applicable laws of the State of New York (iii) applicable laws of the United States of America, (iv) the DRULPA or (v) the Delaware LLC Act.

 

13.                    The Company is not, and immediately after giving effect to the issuance and sale of the Securities occurring today and the application of proceeds therefrom as described in the Disclosure Package and the Prospectus, will not be, an “ investment company ” within the meaning of said term as used in the Investment Company Act of 1940, as amended.

 

14.                    Except as disclosed in the Registration Statement or the Prospectus, no Person has the right, which has not been waived, under any Applicable Agreement to require the registration under the Securities Act of any sale of securities issued by the Company, by reason of the filing or effectiveness of the Registration Statement.

 

15.                    The statements under the captions “Partnership Agreement” in the Disclosure Package and the Prospectus, insofar as such statements purport to summarize certain provisions of documents and legal matters referred to therein and reviewed by us as described above, fairly summarize such provisions and legal matters in all material respects, subject to the qualifications and assumptions stated therein.

 

In addition, we have participated in conferences with officers and other representatives of the Company, the independent registered public accounting firms for the Company, your counsel and your representatives at which the contents of the Disclosure Package and the Prospectus (including the Incorporated Documents) and related matters were discussed and, although we have not independently verified and are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained or incorporated by reference in the Disclosure Package and the Prospectus (except as and to the extent set forth in paragraph 15 above), on the basis of the foregoing (relying with respect to factual matters to the extent we deem appropriate upon statements by officers and other representatives of the Company), (a) we confirm to you that, in our opinion, each of the Registration Statement, as of its most recent effective date, the Preliminary Prospectus, as of its date, and the Prospectus, as of its date, appeared on its face to be appropriately responsive in all material respects to the requirements of the Securities Act and the Rules and Regulations (except that we express no statement or belief as to Regulation S-T), (b) we have not become aware of any documents that are required to be filed as exhibits to the Registration Statement or any of the Incorporated Documents and are not so filed or of any documents that are required to be summarized in the Preliminary Prospectus or the Prospectus or any of the Incorporated Documents, and are not so summarized and (c) furthermore, no facts have come to our attention that have led us to believe that (i) the Registration Statement, at the time it became effective and as of its most recent effective date, insofar as relating to the offering of the Securities, contained an untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Disclosure Package (including the Incorporated Documents), as of 8:35 a.m. on March 2, 2017 (which you have informed us is a time prior to the time of the first sale of the Securities by any Underwriter), contained an untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) the Prospectus (including the Incorporated Documents), as of its date and as of the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, it being understood that we did not participate in the preparation of each of the Incorporated Documents and that we express no opinion, statement or belief in this letter with respect to (i) the historical financial statements and related schedules, including the notes and schedules thereto and the auditor’s report thereon, (ii) any other financial or accounting data, included or incorporated or deemed incorporated by reference in, or excluded from, the Registration Statement, the Disclosure Package or the Prospectus, and (iii)

 

Ex B- 3

 

representations and warranties and other statements of fact included in the exhibits to the Registration Statement or Incorporated Documents.

 

Furthermore, we advise you that according to the effectiveness order of the SEC (regarding the Registration Statement) appearing in the SEC’s Electronic Data Gathering, Analysis, and Retrieval system, the Registration Statement was declared effective under the Securities Act on February 12, 2015.  In addition, based solely on our review of the information made available by the SEC at http://www.sec.gov/litigation/stoporders.shtml, we confirm that the SEC has not issued any stop order suspending the effectiveness of the Registration Statement.  To our knowledge, based solely on our participation in the conferences mentioned above regarding the Registration Statement, no proceedings for that purpose are pending or have been instituted or threatened by the SEC.

 

Ex B- 4

 

Exhibit C

 

FORM OF OPINION OF TAX COUNSEL FOR THE COMPANY AND THE SUBSIDIARIES

 

1.                           commencing with the Company’s taxable year ended December 31, 2013 through its taxable year ended December 31, 2016, the Company has been organized and operated in conformity with the requirements for qualification as a REIT under the Code, and the Company’s organization and current and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code for its taxable year ending December 31, 2017 and thereafter;

 

2.                           the Operating Partnership is classified as a partnership for United States federal income tax purposes and not as an association taxable as a corporation or a “publicly traded partnership” taxable as a corporation under the Code; and

 

3.                           the statements under the captions “Material Federal Income Tax Considerations” and “Additional Federal Income Tax Considerations” in the Prospectus, insofar as such statements purport to summarize certain provisions of documents and legal matters referred to therein and reviewed by us as described above, are correct and fairly summarize such provisions and legal matters in all material respects, subject to the qualifications and assumptions stated therein.

 

Ex C- 1

 

Exhibit D

 

FORM OF OPINION OF IN-HOUSE COUNSEL FOR THE COMPANY AND THE SUBSIDIARIES

 

1.                           Except as disclosed in the Disclosure Package and the Prospectus, no material agreement to which any Subsidiary is a party prohibits or restricts any Subsidiary, directly or indirectly, from paying dividends to the Company, or from making any other distribution with respect to such Subsidiary’s capital stock, partnership interests, membership interests or other equity interests, as applicable, or from repaying to the Company or any other Subsidiary any amounts which may from time to time become due under any loans or advances to such Subsidiary from the Company or such other Subsidiary, or from transferring any such Subsidiary’s property or assets to the Company or to any other Subsidiary.

 

2.                           To my knowledge, neither the Company nor any of the Subsidiaries is in violation of any term or provision of its organizational documents, is in breach of, or in default under (nor has any event occurred which with notice, lapse of time, or both would constitute a breach of, or default under) any material agreement of such entity or under any law, regulation or rule or any decree, judgment or order applicable to the Company or any of the Subsidiaries, except such breaches or defaults that, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the assets, business, operations, earnings, properties or condition (financial or otherwise) of the Company and the Subsidiaries taken as a whole.

 

3.                           To my knowledge, there are no actions, suits or proceedings, inquiries, or investigations pending or threatened against the Company, any of the Subsidiaries or the Advisor or any of their respective officers and directors or to which the properties, assets or rights of any such entity are subject, at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or agency that are required to be disclosed in the General Disclosure Package or the Prospectus but are not so disclosed or that would reasonably be expected to materially and adversely affect the ability of the Company, any of the Subsidiaries or the Advisor to carry out the transactions contemplated by the Underwriting Agreement..

 

4.                           To my knowledge, no individual or entity has the right, which has not been waived, to require the registration under the Securities Act of any sale of securities issued by the Company, by reason of the filing or effectiveness of the Registration Statement.

 

5.                           The execution, delivery and performance of the Underwriting Agreement by the Company and the Operating Partnership and the consummation by the Company and the Operating Partnership of the transactions contemplated by the Underwriting Agreement do not and will not conflict with, or result in any breach of, or constitute a default under (nor constitute any event which with notice, lapse of time, or both would constitute a breach of or default under), any material agreement to which the Company or any of the Subsidiaries is a party.

 

6.                           The issuance and sale of the Securities and the common units are not subject to preemptive or other similar rights arising under any agreement known to such counsel to which the Company or any of the Subsidiaries is a party.

 

7.                           None of the issued and outstanding common units representing limited partner interests in the Operating Partnership or Preferred Units representing limited partner interests in the Operating Partnership have been issued or sold in violation of preemptive or similar rights arising under any

 

Ex D- 1